Response to FCA’s call for input on high-cost credit

Toynbee Hall’s response to the FCA’s call for input on high-cost credit, including a review of the high-cost short-term credit price cap.

In January 2015 the FCA introduced the high-cost short-term credit (payday loan) cap. Two years after its implementation the FCA is reviewing the effects of the cap, and considering whether further policy intervention is needed across the rest of the high-cost credit market. The call for input extends to the whole high-cost credit market, including overdrafts.

Since taking over regulation of consumer credit, the FCA has made significant progress in protecting consumers from harm and took swift action to eliminate the most egregious practices in the high-cost short-term credit sector. But there is evidence that consumer detriment persists in other areas. We therefore see the FCA’s review of high-cost credit as an opportunity to:

1) develop a consistent approach to consumer protection across all credit sectors

2) create an obligation on firms to share data in real time, which would provide lenders with a more detailed picture of the financial pressures people might be facing and help them make better decisions about whether a consumer is eligible for a loan under the FCA’s responsible lending rules

3) consider how a duty of care could further protect consumers from detriment