I was in Basel earlier this week for the
ICTF Conference. It's always a good opportunity to catch up with credit
professionals from around Europe and beyond, and great to hear some of the
issues being faced and how they're being addressed.
Flights and travel gave me the
opportunity to read the FCA's recently published consultation: 'Detailed
proposals for the FCA regime for consumer credit'. We'll be providing the
opportunity for members to submit comments through our November ‘In Brief’, and
I won't go into any detail on the 193 pages, nor the 387 pages of the
Appendices here. I do though want to make just one comment about the FCA's
stated intention to focus on the Payday Loans sector.
I've written several blogs over recent
months arguing that the OFT should, in its final year, take action over
the absence of evidence that affordability tests are being adequately carried
out by payday lenders. I've consistently asserted that this is the key failure
of the market and should be addressed with vigour. It should, after all, be the
determinant in all credit decisions regardless of sector, size or nature.
I've given up hoping that the OFT is going to take any serious action on this in its final days but I was encouraged to read these words in the consultation: "Our proposals.........are based on the principle that money should only be lent to a consumer if the consumer has the ability to repay and in a sustainable way." And in his foreword, FCA Chief Executive Martin Wheatley says: "The OFT affordability guidance is good, but the OFT’s own research shows too few firms implement it. We will put it into our rules and guidance, and enforce this."
Martin's last two words are the most important - let's hold the FCA to account
and ensure it delivers.
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