From 1st April 2014 the Financial Conduct Authority (FCA) will take over the regulation of consumer credit from the Office of Fair Trading (OFT). This affects almost all companies that have previously held a licence with the OFT. It will affect up to 50,000 consumer credit firms.
Their work will have a direct impact on significantly higher numbers of consumers, ensuring that they are treated fairly when obtaining credit or managing debt. They will ensure that consumers continue to have access to services they need whilst protecting them from the harmful lending practices that we see all too often.
Changes will benefit consumers by promoting effective competition which will include better value, products and services from companies; consumers need better protection from firms and individuals that may cause them harm. A case highlighted in the media showed how a consumer borrowed £500 from a loan shark which resulted in her repaying £88,000. This unfair and unreasonable type of practice will come under closer scrutiny under the FCA’s tightened rules.
From 1st April the existing OFT guidance will become FCA rules and guidance; there will be additional rules to consider, and firms that do not follow rules could result in penalties to stop them from trading.
Fact- Total lending in 2013: UK households were lent over £200 bn.
Fact- Total outstanding debt at end of 2013: UK consumers owed £158bn in unsecured consumer credit.