This paper outlines our proposed policy changes to our consumer credit regime.
Why are we issuing this consultation paper?
We have been responsible for regulating the consumer credit market since April 2014. We are now consulting on changes we intend to implement designed to address potential areas of harm to consumers that we have observed in the market. Other changes include clarifications and amendments to ensure our rules clearly reflect our policy intention, or deal with issues raised by firms and other stakeholders.
Our key proposals in this consultation paper are:
Credit broking:
To consult on whether to retain the rules made in PS14/18[1]. We are also seeking views and evidence more generally on appropriate remuneration structures for brokers, and whether new rules should be considered.
Guarantor lending:
To require firms to provide adequate explanations to guarantors, assess their creditworthiness and treat them with forbearance.
High-cost short-term credit:
To remove the exemption from the requirement for firms to include a risk warning in financial promotions.
Financial promotions:
To amend our rules regarding the relative prominence and representative APRs, and to make our current guidance on the clear, fair and not-misleading principle a rule.
Arrears, default and collection:
To correct an anomaly and allow firms to introduce continuous payment authority to collect repayments where a customer is in arrears or default and the lender is exercising forbearance.
Mortgages:
Consequential changes to our rules in relation to the implementation of the Mortgage Credit Directive and the transfer of second charge mortgage regulation.
CP15/6: Consumer credit - proposed changes to our rules and guidance[2]
Who should read this paper?
This paper will be of interest to:
- authorised firms with permissions in relation to credit-related activities, including firms with interim permission;
- firms that are considering applying for authorisation to carry out these activities;
- trade bodies representing consumer credit firms;
- not-for-profit debt advice bodies; and
- consumer organisations
This paper will also be of interest to consumers, in particular anyone who has taken out a loan or other credit product, either directly or via a credit broker, or had difficulties paying back debt.
Next steps
We want to hear what you think of our proposals. Please send us your comments by 6 May 2015 using the online response form[3].
Find out more
For more information:
- view the FCA Handbook[4]
- read our consumer credit pages