FCA looks to make fair loans more accessible amid cost of living squeeze
The Financial Conduct Authority is looking to incentivise firms to offer vulnerable borrowers fairer loans following the slow demise of payday loans.
The UK’s high-interest loan market has shrunk considerably in the past few years, with the market exit from Provident Financial and troubled Amigo which has been batting off insolvency.
The watchdog, which had been increasingly hawkish on payday loans for their impacts on vulnerable people, is now looking to see what can replace the gap in the market, The Times first reported.
It comes amid a cost of living squeeze which has recorded soaring energy billings, rising inflation along with the hard pandemic costs that many families in the UK have had to swallow over the past two years.
With inflation spiralling to a 30-year high, some fear that borrowers may be drawn towards illegal loan sharks.
A spokeswoman for the FCA said: “Ensuring consumers can afford the credit they access is very important, especially when the costs of living are increasing so quickly.
“We recognise that consumers can benefit from accessing credit they can afford, but that the supply of high-cost credit products has reduced. We have begun research with consumers to understand the effects of this for them, including their alternative options.
“We’re also talking to firms and individuals [with] an interest in this issue to better understand what the supply of credit to these customers could look like in the months and years to come and whether we could act to reduce any barriers to the future affordable and sustainable supply of credit to customers who have few borrowing options.”