PARLIAMENTARY WRITTEN QUESTION
Credit (24 March 2015)

To ask Mr Chancellor of the Exchequer, what information his Department holds on the affordability criteria used by the Financial Conduct Authority to set rules to protect consumers taking out loans in the short-term credit market.

Asked by:
Dame Meg Hillier (Labour)

The Government has fundamentally reformed regulation of the consumer credit market. The Financial Conduct Authority’s (FCA) new, more robust regulatory regime is improving protections for consumers in the payday market, including through the introduction of a cap on the cost of payday loans as required by Government.

The FCA has turned key elements of the Office of Fair Trading’s (OFT) Irresponsible Lending Guidance into binding rules, enforceable with the full range of FCA enforcement powers. These rules strengthen consumer protection and are based on the principle that money should only be lent to a consumer if they can afford to repay it.

These rules set out that a firm should assess the customer’s creditworthiness, having regard to:

• the potential for the commitments to impact adversely on the consumer’s financial situation, taking into account information which the firm is (or ought reasonably to be) aware at the time;

• and the consumer’s ability to make repayments as they fall due.

  Further information on the FCA’s rules can be found in its handbook which is available online: http://fshandbook.info/FS/html/handbook/CONC.

Answered by:
Mr David Gauke (Independent)
26 March 2015