You are here: Home - News -

FCA promises tough action as it takes control of consumer credit

  • 01/04/2014
  • 0
FCA promises tough action as it takes control of consumer credit
The Financial Conduct Authority has taken control of the consumer credit industry from today promising tough rules for short-term high-cost credit firms and debt management companies.

In its 2014 risk outlook, published yesterday, the regulator said its plans to enforce a price cap on payday loans may affect some firms’ appetite to remain in the sector if profits are damaged.

Speaking on Radio 5 live this morning, chief executive Martin Wheatley said: “Our processes will probably force about a quarter of the firms out of the industry and that’s a good thing as those are the ones that have poor practices.”

The £200bn-a-year sector, previously the responsibility of the Office of Fair Trading, contains approximately 50,000 firms.

These include credit card issuers, payday-loan companies, pawnbrokers,log book lenders, peer-to-peer lenders, and debt management and secured loan providers and brokers.

Any firm now offering some form of consumer credit will now be subject to the FCA’s consumer protection rules and Principles for Business.

Payday loan and debt management firms will be the see the biggest changes to the way they operate.

The new rules include limiting the amount of times a payday loan can be rolled over to the next month to two and providing consumers with information on how to obtain free debt advice. 

Secured loan brokers and lenders are not expected to feel any major changes until the EU Mortgage Directive rules are passed into UK law at which time they are expected to be merged with first charge mortgages.

But Buster Tolfree, commercial director at Central Trust, said secured loan firms should act now to ensure they are lending responsibly.

“In the medium-term MMR-style affordability models will ensure all lenders follow a responsible approach to affordability over the term rather than simply relying on out-of-date, debt-to-income ratios,” he said.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Words fraud with fraud picked out in red
Mortgage industry bucks rising fraud trend

The mortgage industry was one of the few financial services sectors to witness a decline in fraudulent activity in the...