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Consumer credit figures show Government should take stock before introducing new regulation
Before considering any new regulation, the Government should take stock of the important new consumer rights already being introduced by lenders. This is the message from the Finance & Leasing Association, which released figures today showing that spending in March on loans, store cards and credit cards was down by 33%, 20% and 3% respectively compared with a year ago. Meanwhile, credit for car sales grew by 31%.
Against this background, the FLA has called on the Government to think very carefully before implementing its proposals to cap interest rates on credit and store cards and impose a seven-day cooling-off period on store cards. Further regulation of this kind could leave consumers with less choice from legitimate lenders and force some into the arms of loan sharks.
Fiona Hoyle, FLA Head of Consumer Finance, said:
“Lenders are already making significant changes to the way they sell credit, to comply with the EU Consumer Credit Directive and the OFT’s new rules on Responsible Lending. The Government’s proposal for further regulation before these changes have been implemented risks confusing customers and gold-plating the EU Directive, which already gives store card customers a 14-day right of withdrawal.
“15 million people have a store card account. Real customer benefits would be lost if a cooling-off period were introduced.”
Table 1: New consumer credit lending, March 2010
| Mar 10 | % change | Q1 2010 | % change | 12 months to Mar 2010 | % change | |
| Total FLA consumer finance (£m) | 5,229 | +3 | 12,469 | -5 | 52,501 | -10 |
| Store cards (£m) | 167 | -20 | 471 | -16 | 2,470 | -12 |
| Credit cards (£m) | 2,760 | -3 | 7,319 | -8 | 31,895 | -7 |
| Store instalment credit (£m) | 216 | -6 | 592 | -6 | 2,520 | 0 |
| Second mortgages (£m) | 27 | -18 | 82 | -18 | 331 | -77 |
| Direct unsecured loans (£m) | 215 | -33 | 598 | -39 | 2,586 | -45 |
| Car finance (£m) | 1,753 | +31 | 3,231 | +20 | 11,816 | +1 |
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Note to editors:
In addition to the Consumer Credit Act, the Consumer Credit Directive and the Irresponsible lending guidance, there have been specific measures on the operation of credit and store cards, second-charge mortgage guidance during the parliamentary term of the previous government.
In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. Almost £30 billion of investment finance was provided to businesses and the public sector, representing around a quarter of all fixed capital investment in the UK last year. £53 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