Bookkeeping

FCA seeks to make fair lending more accessible amid cost of living squeeze

Monday 07 March 2022 07:33

The Financial Conduct Authority is seeking to urge companies to offer vulnerable borrowers fairer loans following the slow demise of payday loans.

The UK high-interest loan market has shrunk considerably in recent years, with the exit from the market of troubled Provident Financial and Amigo, which has postponed insolvency.

The watchdog, which had been increasingly belligerent over payday loans for their impacts on vulnerable people, is now looking to see what can fill the gap in the market, The Times first reported.

It comes amid a cost of living squeeze that has seen rising energy bills, rising inflation as well as the costs of the pandemic that many families in the UK have had to swallow over the course of of the past two years.

As inflation hits its highest level in 30 years, some fear borrowers may be lured by illegal loan sharks.

An FCA spokeswoman said: “Ensuring consumers can afford the credit they have access to is very important, especially when the cost of living is rising so rapidly.

“We recognize that consumers can benefit from access to credit that they can afford, but that the supply of high-cost credit products has declined. We began research with consumers to understand the effects of this for them, including their alternative options.

“We also talk to businesses and individuals [with] an interest in this issue to better understand what offering credit to these customers might look like in the months and years to come and if we could act to reduce barriers to future offering affordable and sustainable credit to customers who have few borrowing choices. »