FCA has published a Call for Input on high-cost credit, including a review of the high-cost short-term credit price cap. In the last two years, FCA has focused on products it believes pose the highest risks to its customer protection objective. One area of particular focus has been high-cost credit that includes payday loans, home-collected credit, catalogue credit, some rent-to-own, pawn-broking, guarantor and logbook loans.
The Call for Input covers :
High-cost products – FCA wants to build a full picture of how high-cost products are used, whether they cause harm, and, if they do, which customers are affected. It can then consider whether to make further policy interventions. It will also look at overdrafts from a customer protection and competition perspective (CMA has previously identified issues around overdrafts such as poor price and charge transparency).
The high-cost short-term credit (payday loan) price cap –price caps for payday loans were introduced in January 2015 to prevent payday loan customers paying back more than twice the value of the amount borrowed. FCA wants to establish what impact this has had and whether it has in fact driven customers to loan sharks due to the price cap restricting credit supply.
Repeat and multiple high-cost short-term credit (HCSTC) borrowing –FCA will continue to monitor the impact that repeat and multiple borrowing has on the market and consumers.
The Call for Input is open until 15 February 2017 and FCA will publish its findings in summer 2017.