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Regulatory arms race could hit lending markets, FLA chairman warns
The competition between political parties as to who can sound the toughest about regulating the credit markets must stop, and politicians should take collective responsibility for encouraging the current slow recovery. That’s the message that David Betteley, Chairman of the Finance & Leasing Association (FLA), gave to the 1,300 guests at the organisation’s annual dinner on 23 February.
The credit industry is facing an avalanche of new regulation which could put serious pressure on some important markets1. Mr Betteley argued that, while the industry would continue to support sensible new regulation, in the run-up to the General Election the political parties should avoid vying with each other to impose tougher-sounding requirements without considering the impact on consumers.
Mr Betteley said:
“There seems to be a political and regulatory competition going on at the moment as to who can sound toughest.”
Referring to the unintended consequences of excessive regulation, Mr Betteley said:
“The risk is that if this regulatory arms race doesn’t moderate, some lending markets will shrink significantly, with the result that many customers will be disenfranchised or forced to turn to loan sharks.”
Mr Betteley urged politicians of all parties to take collective responsibility for the debate on regulatory reform:
“Careful thought and thorough discussion will get better results. The goal should be to encourage the slow recovery we have already started to see. That will be good for individual consumers as well as for the economy as a whole.”
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1 For example, some of the Government’s proposals for new regulations on credit card limits could restrict the availability of credit to responsible borrowers; and the Conservatives’ proposals for cooling off periods for store cards could prevent customers from taking advantage of the good deals they can provide.
Note to editors
The FLA is the leading trade association for the asset, consumer and motor finance sectors in the UK, covering secured and unsecured loans and credit and store card providers. In 2009 FLA members provided £52.8 billion to the consumer finance sector, representing almost 30% of all unsecured lending 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 766993