Improving Credit Regulation

In our response to the FCA’s consultation on credit advertising, we warn against proposals to weaken representative APR rules and cost disclosure protections.

Calls for deregulation are ignoring the lessons of the past. In this blog we draw on our recent response to the FCA and FOS joint call for input concerning 'mass redress' events to highlight how a lack of clear rules and (de)regulatory 'sludge' combine to cause widespread consumer harm. We need better regulation not deregulation to support 'growth without consumer exploitation'.

Our recent analysis of the Debt Need Survey provides important new evidence about the drivers of illegal lending. Contrary to recent reports of a 'credit vacuum' arising from regulatory interventions, we find most users of illegal lenders are 'maxed out' on legal credit. The underlying problem is poverty, which credit markets cannot be expected to address.

Following the Chancellor's Mansion House speech there have been calls for the FCA to review its creditworthiness and affordability rules. In this blog, we argue these regulations are not the reason why fewer low income households have been able to access credit in recent years. Those calling for a watering down of consumer protections are ignoring the wider context of the cost-of-living crisis which has made consumer credit less affordable.