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Response to the FCA's proposals on high-cost short-term credit

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High-cost short-term credit. Comment from StepChange Debt Charity.

We welcome the improvements that have been made since the FCA took over regulation of the high-cost short-term credit (HCSTC) sector in April 2014. However we do still have concerns about the HCSTC sector and believe further improvements could be made.

We welcome this opportunity to respond to the FCA on their proposals in response to the CMA’s recommendations on HCSTC. The key points from our response are:

  • We are concerned that the FCA findings suggest poor conduct amongst PCWs and are therefore supportive of the FCA’s proposals to improve PCWs conduct. We agree with proposals to introduce additional standards to present competitively neutral product information, enable search functions by loan amount and duration, requiring ranking results in order of TAP and requiring PCWs to disclose the names of lenders.
  • We are not supportive of the FCA’s approach of allowing credit brokers to feature on PCWs. We agree with the CMA that PCWs should only include loan products on their loan comparison tables and not include credit brokers or other intermediaries as having them on PCWs could undermine competitive neutrality and confuse consumers and lead to them making poor decisions.
  • In order to address the continued issue of multiple lending in the HCSTC market, we call on the FCA to look again at both the need to mandate real-time data sharing and the way that firms use currently this data. This is essential to ensuring that loans are lent responsibly, based on full information about a customer’s financial commitments.

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