Consumer Credit Act is ‘good start’ – FLA

The Finance & Leasing Association (FLA) has called a proposal to transfer consumer credit regulation in the UK to the Financial Conduct Authority (FCA) the right starting point. However, themotor finance trade body warned the recommendations by the Financial Services Consumer Panel could stifle a significant amount of lending to small businesses. Although in favour of the Consumer Credit Act (CCA), Stephen Sklaroff, director general of the FLA, repeated previous concerns over the potential structure of the FCA, which would regulate it

The Finance & Leasing Association
(FLA) has called the Consumer Credit Act (CCA) “the right starting
point” for the basis of any new credit regulation.

The asset finance trade body is concerned the
CCA may be replaced by the Financial Services and Marketing Act
(FSMA), either outright or as part of transferring credit
regulation from the Office of Fair Trading (OFT) to the Financial
Conduct Authority (FCA), as
recommended by the Financial Services Consumer Panel.

The FCA,
soon to replace the Financial Services Authority (FSA), is
expected to operate under the model of the FSMA, created to
legislate saving and bank deposit markets, rather than those of
credit.

Although it has raised issue with the
government over the CCA in the past, the FLA warned that moving
credit regulation to a body working along FSMA guidelines could
stifle a significant amount of lending to small businesses.

Stephen Sklaroff, director general of the FLA,
repeated
previous concerns over the FCA:

“The Financial Services Consumer Panel is
right that future changes to consumer credit regulation should
start with the CCA.

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“Whether or not regulation transfers to the
new FCA, the regime which the FCA will inherit in the deposit and
savings markets is not appropriate for credit, and would put at
risk a significant amount of responsible and economically vital
consumer and small business lending.”

“Our concern is that the FSA/FCA rules for the
savings and deposit markets would simply not work for credit,”
added a spokesperson for the FLA.

“The result would be a market contraction. But
we can see no reason why, even if responsibility does transfer, the
FCA couldn’t carry on with the CCA in the credit markets.
Therefore, the real question is not who does the regulation, but
what the rules say.”

richard.brown@vrlfinancialnews.com