Financial Conduct Authority High Cost Credit Review: The Whackamole Response
Responding to the Financial Conduct Authority review into high cost credit published on Thursday 31st May Stella Creasy MP said :
'Capping rent to own charges is a step forward, but yet again we're seeing the FCA play 'whackamole' - looking at individual products and trying to hit them rather than seeing the bigger picture of how these companies evolve to evade regulation. Only capping the cost of credit itself will stop this behaviour and truly protect all consumers.
Half of those who went to the Citizens Advice Bureau with problems from rent to own deals had borrowed to help make repayments. Acting on rent to own but not doorstep credit, overdraft charges or even credit cards is yet again missing the way in which people are borrowing to help bridge the gap between what they earn and what they owe. With millions of people borrowing to pay off debt from borrowing, just looking at individual deals rather than how these companies exploit cash strapped brits means the FCA will always be playing catch up.
Its time to send a message to these companies that changing shape- from doorstep lender to credit card provider or guarantor loans- won't get them out of their responsibilities to treat British consumers fairly. How can it be right now that you are better protected taking out a payday loan than using a credit card because one has a cap and the other doesn't?
We need to learn the lesson of the payday lending industry and not wait around for debt to get worse before doing anything- The FCA needs to consult on a cap on the cost of all forms of credit and the Government needs to give them the legal backing to do it to stop many more Brits being stuck in a spiral of multiple debt'