Response to the Public Accounts Committee (PAC) report on regulating consumer credit

In response to the Public Accounts Committee (PAC) report on regulating consumer credit Which? executive director Richard Lloyd said:

“This is a damning verdict on the credit market and the Office of Fair Trading’s failure in the past to step in and protect consumers. It underlines once more why a crackdown is urgently needed to tackle unscrupulous high-cost lenders.

“We are encouraged by the OFT’s recent, tougher, approach but there must be no further delay in taking action, starting with a ban on excessive fees and charges, and stricter rules on affordability checks. When the Financial Conduct Authority takes over the regulation of credit next year, we’ll continue to push for them to be the strong and proactive regulator consumers need.

“Let this be the final warning to all lenders to clean up their act.”


Which? wants the Government and the FCA to send a clear message to lenders that they are committed to cleaning up credit. In March, Which? challenged the FCA to:

  • Ban excessive default fees and charges – the FCA should require that the level of default charges should reflect lenders’ actual costs, and there should be a cap on the total amount of default charges.
  • Crack down on irresponsible lending – the FCA should enforce strong rules on affordability checks that properly take into account a borrower’s income, expenditure and ability to repay the debt, including any outstanding credit commitments.
  • Put people in control of their credit – end unsolicited increases in credit limits, unauthorised overdrafts should be opt-in only and there must be a limit to the number of times high-cost loans can be rolled over.
  • Clear and transparent information – the cost of credit and all fees and charges should be transparent, and for high-cost credit should be displayed clearly as pounds per £100 borrowed over 30 days. Credit products should come with clear health warnings explaining the consequences of missed payments.
  • Swift and early intervention for people in financial difficulty – the FCA should force lenders to freeze charges for borrowers in difficulty, and prevent them from charging interest on high-cost loans beyond 30 days after borrowers default. Lenders must help borrowers in difficulty and refer them to free independent debt advice.

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