Andrew Bailey has spoken to the FLA on the current consumer credit landscape. He noted the constant fall in the real cost of debt which has supported the rise in household borrowing, and the growth in consumer credit particularly among the young. FCA has carried out several pieces of research to determine who is driving the growth in consumer credit and has concluded it is mainly those without mortgages. FCA data also suggests the debts remain for longer than product-level data would suggest.
FCA’s key message for firms is that they should ensure that all their lending is affordable and sustainable, whether it is high-cost credit or not. Its consultation last year was aimed at setting parameters for firms but allowing them to use their discretion within those parameters.
He explained the background to the new rules designed to reduce the number of consumers with persistent credit card debt, and said FCA plans to publish an update on its review of the increasing use of Personal Contract Purchases for car finance in March.
He then turned to discuss FCA’s principles for intervention in the high-cost credit markets, saying it is prepared to intervene and propose new rules where it feels markets are not working well for consumers and described FCA’s work in the rent-to-own sector.
He finished by outlining other initiatives, such as the review of retained CCA provisions.