New regulator for consumer credit

On April 1, the Financial Conduct Authority (FCA) took over regulation of 50,000 consumer credit firms, from credit card providers to lenders offering high-cost short-term borrowing on the high street and online.

The FCA’s aim is to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers.  It has rule-making, investigative and enforcement powers that are used to protect and regulate the financial services industry.

Consumer credit providers will need to ensure that they give customers the right information to make informed choices, that their services meet consumer needs, and that people in difficulty are treated fairly. The biggest changes come for payday lenders and debt management companies, including:

• limiting the number of loan roll-overs to two
• restricting (to two) the number of times a firm can seek repayment using a continuous payment authority (CPA)
• a requirement to provide information to customers on how to get free debt advice
• requiring debt management firms to pass on more money to creditors from day one of a debt management plan, and to protect client money

Financial Conduct Authority Chief Executive, Martin Wheatley, said:

“We have a big task ahead; it’s our job to make sure firms put their customers at the heart of their business and don’t just see them as an easy target or a profit line. We won’t shy away from taking tough, decisive action to make sure that the people who rely on these products are treated fairly.  There will be some firms that don’t get the message, or won’t play ball, those firms should know that we won’t let them carry on.”

For further information on the FCA visit http://www.fca.org.uk/