The future of consumer
credit and payday
regulation
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Consumer credit regulation is changing
April 2014
• The Financial Conduct Authority takes over
consumer credit regulation from the OFT
• This creates a single regulator for conduct in
retail financial services
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Consultation paper 2
October 2013
The journey
Consultation paper 1
March 2013
FCA CC regime
commences (Interim
Permission)
April 2014
Final rules published
February 2014
End of Interim
Permission period
March 2016
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About the FCA
The FCA’s objective is to make markets work well
for the consumer:
• Consumer protection
• Competition
• Market integrity
Firms are expected to put consumers at the heart
of their business
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What we do
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•
We authorise – firms and individuals can only
carry out regulated financial services if they
are authorised by us
•
We supervise – depending on the size and
nature of the business
•
We enforce – when firms and individuals
don’t play by the rules
Consumer credit - our aim
“A market that works well for consumers and for
firms will be of benefit to everyone and to the UK
economy.”
“…create a regime that protects consumers and
allows business to operate.”
Martin Wheatley, Chief Executive
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3 October 2013 – Consultation published
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Our proposals
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•
•
•
•
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Affordability checks for every credit agreement
All advertisements and promotions must be
clear, fair and not misleading
Standards for firms to get through the
authorisations gateway
Reporting requirements for firms
Firms doing higher risk business and pose
greater risk to consumers will face tougher
supervisory approach
Our proposals
•
•
•
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Debt management firms and some not-forprofit advice bodies will have to hold specific
amounts of capital
Debt management firms to spread fees to
allow creditors to be paid back from the start
Consumers will continue to have access to
FOS, but no plans to include consumer credit
under FSCS
Payday
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Our aims for payday
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•
Ensure firms only lend to borrowers who can
afford it
•
Increase borrowers’ awareness of costs & risks
•
Increase awareness of ways to get help
•
Tackle bad practices, ensure consumers are
treated fairly and given forbearance when
needed
•
Improve dialogue between lender and borrower
Our proposals – high-cost short-term
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•
Affordability checks
•
Rollovers limited to two
•
Continuous payment authorities limited to two
•
Payday lenders must inform customers of free
debt advice before refinancing
•
Risk warnings on loan adverts
•
Minimum stds for advertising and cold calling
The Competition Commission review
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•
We see our proposals as complementary
•
We believe our proposals will be procompetitive overall
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We continue to work closely with the CC
•
We will reflect on CC’s findings and assess
whether further rule changes are needed
Why not go further?
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•
Our proposals address the problems as we see them,
based on evidence we have
•
Proposals work as a package
•
Proposals are proportionate and will deliver considerable
benefits for consumers overall
•
We will monitor firms and keep options under review
(including real time data sharing)
•
Our proposals puts firms on notice!
•
We welcome views on our assessment of the issues and
proposed solutions – have we got it right?
What about interest rate / cost of credit caps?
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We have the legal power – useful to have
•
The Bristol Report suggests caps could have
unintended adverse impacts on consumers
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We have committed to looking at this in detail
after April, collect the evidence, and consult
fully
•
We will look at outcomes of caps in other
jurisdictions
We want to hear from you
• Tell us what you think of our proposals
before 3 December
• You can find our consultation on
www.fca.org.uk
• We want your feedback
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