PARLIAMENTARY WRITTEN QUESTION
Loans: Coronavirus (5 November 2020)

The Government has fundamentally reformed regulation of the consumer credit market, giving control of this area to the Financial Conduct Authority (FCA) in 2014.

This more robust regulatory system is helping to deliver the Government’s vision for a well-functioning and sustainable consumer credit market which is able to meet consumers’ needs.

The Government has given the FCA strong powers to protect consumers. The FCA assesses every lender’s fitness to trade as part of the authorisation process, and it has put in place binding standards on these firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has various methods to punish breaches of its rules – there is no limit on the fines it can levy and, crucially, it can force lenders to compensate consumers.

The FCA have also asked Christopher Woolard, former Interim Chief Executive of the FCA, to conduct a review into change and innovation in the unsecured credit market. He will report his findings in early 2021. The review will concentrate on how regulation can better support a healthy unsecured lending market. It will take into account the impact of COVID-19 on employment security and credit scores, changes in business models and new developments in unsecured lending, including the growth of unregulated products in retail and the workplace.

We continue to work closely with the FCA to monitor the consumer credit market through the ongoing restrictions to ensure that any emerging risks are identified, and we will take action where necessary.