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 2016 we were jointly commissioned by UNISON and the TUC to undertake an analysis of over-indebtedness in Britain. The report highlighted how traditional measures of the debt burden understated this because they fail to take account of rising living costs. We construct a new measure based not on gross incomes but on the level of interest payments relative to the available surplus of income over non debt related expenditure. We call for this measure to be used to guide future policy interventions.
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.
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.
This report provides an assessment of the social benefits that have been created by Fair for You: a Community Interest Company providing affordable credit to families with incomes in the lower half of the income distribution throughout the UK.