On 26 October 2020, the UK Financial Conduct Authority updated its webpage on its review into change and innovation in the unsecured credit market. This review will be led by Christopher Woolard.
The review will look at:
– how regulation can better support a healthy unsecured lending market; and
– the impact of COVID-19 on employment security and credit scores, changes in business models and new developments in the unsecured lending (including the growth in point of sale unregulated products).
The webpage sets out the review’s terms of reference. These are:
– To examine the current state of the unsecured credit market in the UK including the component parts, recent changes in size and scale, whether in regulated or in adjacent unregulated products.
– To examine changes in regulation, noting those areas that have been subject to regulatory oversight in recent years from a variety of bodies including the FCA (for example overdrafts or high cost credit), and comparing likely harms or dynamic effects seen in those areas.
– To examine the immediate effect of coronavirus on demand for unsecured credit and on the role of credit information.
– To report on possible trends and potential future pressures.
– To identify areas of growth in demand from consumers for credit including from non-traditional providers of credit.
– To present an assessment of the benefits and harms evident in the market and those that may be expected as the market develops.
– To compare international approaches to these issues where relevant.
– To make conclusions and recommendations to the FCA Board on management of harms in this sector; gaps in understanding or data; potential changes in regulation for the FCA to consider; advice on potential changes to the overall system the FCA may wish to consider with other authorities or the Government; and possible innovations to support a sustainable market.