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Response to FCA consultation on creditworthiness

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Our response to the FCA’s consultation on assessing creditworthiness in
consumer credit

As the largest specialist debt advice charity helping people across the UK, we welcome the opportunity to respond to this consultation paper.

Creditworthiness assessments, particularly the affordability element of these, are an essential tool to prevent households from falling into problem debt. Therefore we welcome the changes in the rules, particularly on making affordability a more explicit element of creditworthiness assessments. However, we are still concerned that it is uncertain how these changes as a whole will make a significant enough impact to tackle current issues with responsible lending.

However, we are still concerned that it is uncertain how these changes as a whole will make a significant enough impact to tackle current issues with responsible lending.

Concerns

  • The approach is generally reactive rather than more proactive and preventative
  • The structure of credit card lending, with low minimum repayment requirements, disincentives responsible lending
  • Unarranged overdrafts are not currently subject to creditworthiness assessments
  • Figures used in the paper may underestimate the levels of people in financial difficulties

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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