Current Issues

The FLA campaigns on key industry issues and influences proposals for change, helping shape government policy and regulation. This involves developing policy areas across the wide range of industry issues, lobbying decision-makers both at home and in Europe.

The FLA is committed to promoting responsible lending and delivering real help now for consumers in financial difficulties. Our robust Lending Code ensures that consumers are treated fairly.  However, with a contracting consumer credit market (lending is around a fifth down on pre-credit crunch levels), there is a real concern that a proliferation of regulatory reviews and consultations, coupled with the further regulation already in the pipeline, could cause the market to shrink further. This could have a serious impact on the availability of credit for consumers.  The FLA is working to ensure that a balanced approach is taken by the Government to its work in respect of the consumer credit market. It is important that the needs of the credit consumer are fairly balanced against those of the credit providers.

The FLA Consumer Finance team are currently working on:

Review of the FLA Lending Code

The FLA Lending Code stands out as an example of effective and flexible self-regulation.  In order that the Code remains fit for its purpose and relevant to the industry in which it operates, in 2011 we are undertaking a review of the Code, especially in light of the new regulations of the Consumer Credit Directive and the Irresponsible Lending guidance from the OFT. We expect the review to be completed by the FLA AGM in May.

Store and credit cards and interest rate restrictions

The Coalition Government has proposed changes to credit and store cards, which would see regulators being given powers to impose rate caps on interest rates on credit and store cards. Other measures in their proposals involve a seven-day cooling off period after taking a store card out during which the customer would not be able to use the card. This replicates measures already being brought in to credit regulation by the CCD. The other proposal from the coalition is online statement on credit accounts, a measure which lenders have already agreed to in credit and store card reforms.

The FLA has responded to the Government's consultation on this, and other, issues - the Review of Consumer Credit and Personal Insolvency. We presented evidence of the inefficacy of rate caps as part of our evidence. We will continue to work with the Government to find a solution acceptable to both industry and legislators.

Credit searches

The FLA, along with the British Bankers Association, UK Cards and the credit reference agencies, have been working on how quotation searches can best be used when a person wants to shop around get an accurate quote for credit without the search being recorded on their credit file and damaging their chances of getting credit. The FLA is writing to HM Treasury to set out our position.

Payment protection insurance

The FLA is currently in discussions with both the Competition Commission and the FSA about the future of PPI. The Competition Commission is concerned about the credit provider’s advantage in the sale of PPI and has made moves to delink the sale of the insurance and the credit, despite successful appeals from the industry. The Commission has published a Draft Order, which, if passed in April 2011, will mean that lenders will no longer be able to sell PPI at the credit point of sale from April 2012.

The FSA is concerned about the treatment of complaints by firms offering PPI. They are currently proposing a set of guidelines which will have huge costs on the credit industry. We continue our discussions with the FSA to try to find a solution which will be fair to lenders, while allowing consumers the redress opportunities they seek.