News
Burdensome regulation could lead to smaller, more polarised credit market, says FLA director general
When considering any new regulation for consumer credit, the Government should take care to avoid unintended and potentially damaging consequences for lenders and their customers, Stephen Sklaroff, Director General of the Finance & Leasing Association (FLA) will tell delegates at the FLA Consumer Finance Conference today.
He will tell around 100 delegates from the financial services sector - including banks, building societies, credit and store card providers - that the industry is still implementing a huge volume of new regulation created by the last Government. This comes at a cost, which can reduce availability and affordability to customers.
Some customers are already finding it hard to get credit in the regulated markets, raising the risk of financial exclusion and, as a result, more frequent recourse to loan sharks. In April the amount of credit granted by FLA members was 9% lower than in April 2009.1
Given the state of the markets, the new Government should move cautiously when considering any additional burdens, or changes to the current regulatory architecture.
Mr Sklaroff will say,
“If we are to avoid the serious social and economic consequences of a smaller, more polarised consumer credit market, a proper balance needs to be struck between consumer protection and maintaining a competitive market.”
- ends -
Note to editors:
1The amount of credit granted was 9% lower than in April 2009. Store card lending contracted by 14%, credit cards by 12%, store instalment credit by 19%, unsecured loans by 42% and second-charge mortgages by 20%. The only exception was car finance provided through dealers, which was up by 15% in April compared with the year before.
In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. Almost £19.3 billion of finance was provided to businesses and the public sector, representing around a quarter of all fixed capital investment in the UK last year. £53.2 billion was in the form of consumer credit, including a third of all unsecured lending in the UK. And £16.5 billion supported the purchase of half of new car registrations in the UK.
For further media information, please contact:
Russell Hamblin-Boone, FLA
T: 020 7420 9656 E: russell.hamblin-boone@fla.org.uk M: 07810 374110
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993