ABCUL comments on FCA’s High-Cost Credit Project Update
02 Feb 18
This week saw the Financial Conduct Authority (FCA) publish an update on its project of work around the High-Cost Credit Market. The update set out a range of measures it is considering as intervention in the rent-to-own, doorstep lending and overdraft markets.
It also sets out the FCA’s initial take on how it might assist in the promotion of alternatives to high-cost credit citing credit unions as a key sector in delivering affordable credit. Among the areas the FCA might intervene to support alternatives are: increasing capacity of credit unions to lend, addressing regulatory uncertainty and improving the utility of credit reference information.
Commenting on the update, ABCUL’s Head of Policy & Communications, Matt Bland said: “We welcome this update from the FCA and have been engaged with the team conducting this work both in terms of highlighting the problems in the high-cost credit market and exploring how FCA can support the credit union sector to expand.
“In terms of regulatory uncertainty, credit union efforts to support the financial wellbeing of low-paid workers can often be hampered by unfounded concerns on the part of employers about the regulatory implications of promoting credit unions. Similarly, the FCA’s interpretation of the Credit Unions Act has recently been a barrier to credit unions innovating, developing new lines of credit and thereby building their capacity to take on high-cost credit. And in relation to credit data, many of our members regularly complain that payday and other short term high-cost debts do not appear in the credit data they access when making a decision which makes lending responsibly and economically very difficult.
“We will continue to engage with the FCA on how they might alleviate some of these barriers to credit union expansion.”