FCA still investigating second charge market for unaffordable lending

The regulator made the clarification after trade body the Finance and Leasing Association (FLA) earlier this week claimed the FCA had not been able to backup its original concerns.

The FLA also said the FCA had removed reference to the second charge market from a webpage detailing ongoing work in the consumer credit sector.

However, an FCA spokeswoman confirmed to Specialist Lending Solutions that the investigation, which was first announced in its business plan in April, was still actively looking at second charge lending.

The regulator did not comment on the FLA’s claims that it had provided little evidence to its concerns, but said it was still scoping the work for the review.

As a result, it had no timeline for any update on the investigation.

Broader investigation

It appears the FCA has widened the areas it is investigating, rather than eliminating the second charge market.

The FCA told Specialist Lending Solutions: “Our business plan committed us to undertake a piece of work to examine whether certain retail lending firms operate with business models that benefit from unaffordable lending.

“The business plan explicitly identified a particular retail lending activity that we would look at as part of our diagnosis of this particular issue.

“The scope of our work is intended to be much broader than focusing on one type of retail lending activity or a narrow group of retail lending activities.

“So, we have clarified the breadth of our work by removing the explicit reference. We confirm that this business plan commitment will continue and that our work will encompass a range of retail lending activities.”