The Financial Conduct Authority is in the final stages of consulting on its proposals for a new Consumer Duty, which focuses on ensuring improved outcomes for users of financial services and products. In this briefing we consider how the proposed duty could help to address long-standing problems associated with ‘relending’ in the UK’s consumer credit markets.
In 2008, as the financial crisis hit, our Executive Director, Damon Gibbons, teamed up with Ian McCartney MP to write a briefing focused on the need to protect low income borrowers. The report coined the term 'credit dependency', to describe the relationship with high cost legal lenders, and called for caps on the cost of credit, greater focus on affordable lending, and action to tackle illegal lenders.
In 2012 we undertook a study tour to Japan and investigated the impact of their measures to cap the cost of credit and prevent irresponsible lending. Our report highlights the positive effects of these measures, and drew out the implications for the UK.
The pandemic's impacts have been extremely unequal. And there are implications for the way we should assess credit risk. In a briefing paper for the University of Birmingham's Centre on Household Assets and Savings Management ('CHASM'), we call for credit scoring systems to incorporate social justice considerations.
In October 2019, we were commissioned by The Commonwealth to review international approaches to deal with rising household debt. This led to a discussion paper which we presented to Commonwealth Central Bankers at the IMF/World Bank event in Washington DC.
We need urgent action to address Britain’s household debt crisis. Even before the Covid‑19 pandemic 7.2 million people (fourteen percent of the population) were heavily burdened by debt.