Our six recommendations to help improve the HCSTC market
Our report calls for more to be done to make this type of lending better for borrowers, and investigates what alternative forms of more affordable credit are needed for those that are more financially vulnerable.
The key recommendations are:
1. The FCA should explore, as part of their review of the price cap, what the implications of the shift to instalment loans are for the appropriate level of the price cap.
2. The FCA should strengthen their rules on responsible lending, including turning their existing guidance on responsible lending into rules. For example, creditworthiness assessments should be required to take account of whether the customer is experiencing difficulties with their existing financial commitments.
3. The FCA price cap review should have a broad scope to include the continuing issues with the treatment of customers in arrears and how to tackle them.
4. HCSTC lenders should ensure that their debt collection practices are based on supporting affordable and sustainable repayments and providing appropriate support to help customers in financial difficulties.
5. The FCA should ensure consistency of regulation across different forms of high cost and mainstream credit to deal with the problems financially vulnerable consumers’ experience. This would include, for example, setting a cap on unarranged overdraft charges.
6. The government needs to look at new ways to provide greater access to more affordable credit safety nets for the most financially vulnerable, including looking at international examples of no and low interest loan schemes.
Download the report now for the full picture.