Finance & Leasing Association15 December 2022
Last week, the Chancellor set out a comprehensive programme of actions (known as the ‘Edinburgh reforms’) which takes HM Treasury beyond the next election. It feels as if the financial services sector is set to move beyond the distractions of Brexit, the pandemic and the short-lived Trussenomics. One surviving element of the latter is the Government’s focus on growth. This concept is writ large throughout the Reforming the Consumer Credit Act 1974 consultation for which the drivers include “promoting economic growth [and]…facilitating innovation in products and the arrival of new entrants into the market”.
This commitment to overhaul the regulatory framework is long overdue and has been undoubtedly hastened by the shortcomings of the Act in relation to support for vulnerable consumers at the height of the pandemic and the piecemeal approach by various Governments and regulators to address issues arising. The FLA will work with HM Treasury, other industry bodies and consumer organisations to develop a regime which delivers optimal outcomes for both consumers and lenders. The principles set out in the consultation paper align with our thinking notably that the new system shall be proportionate; aligned (with the implementation of the Future Regulatory Framework); forward-looking (though I would consider ‘future-proof’ a more attractive concept); deliverable; and simplified. We anticipate that the process of reform will take several years but it’s right and proper to ensure it is a thorough exercise.
The other announcement of note was that the Green Finance Strategy shall be updated in early 2023. Whilst commentators have suggested the Government might push back on Net Zero targets, including the 2030 phasing out of sales of new petrol and diesel cars, precious little has been confirmed. It is critical that this revised strategy addresses the challenges industry faces to democratise the market for green assets which currently remain the preserve of better-off households and businesses (often larger in scale). These comprise the lack of a viable secondary market to enable re-use of business assets or cars and an infrastructure which is not yet of sufficient scale to meet future demand. The recent announcement of the ECO+ scheme to make homes more energy efficient is a positive move which we hope will kick-start investment towards greener households.
The FLA is also set to publish the findings of research into the Future of Credit in terms of how it is perceived by consumers, how they use it and how the experience can be improved for them in future.
It’s looking like a busy start to 2023!
Published 15 Dec 2022
