The Finance & Leasing Association (FLA) has urged the next government to allow the new system of credit regulation to be implemented without further changes in its 2015 manifesto.
According to the association, it will be nearly two years before all lenders have been formally authorised under the new system and further changes would risk damaging the market.
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The Financial Conduct Authority (FCA) began regulating the consumer credit sector last April, covering the credit provided to consumers and many small businesses directly and through brokers, high street stores and motor dealerships. As a result, 50,000 firms will have to be formally authorised by the FCA over the next twelve months.
The FLA believes that the FCA has a duty to promote competition in the regulated market, but said it realises that there is a tension between this duty and some of the effects of regulation.
"If the right balance is not struck, responsible lenders and intermediaries may leave the market, thereby reducing the supply of credit, impairing economic growth and increasing financial exclusion," the association wrote.
In response to the FCA’s plans to implement and review the consumer credit regime in its business plan for 2015/6, the FLA told Leasing Life: "The FCA’s review in 2015/16 is part of their post-implementation plan, a usual procedure when new rules are introduced, and one we fully support. It’s part of the checks and balances of regulation, not a major change programme. What the market needs now is a period of consolidation, time for the regime to bed-in."
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By GlobalDataApart from credit regulation, the FLA manifesto calls for a long-term commitment from the government to the future of the British Business Bank – including creating a comprehensive online directory of business finance providers – as well as expanding the Enterprise Finance Guarantee to cover leasing and hire purchase.
In addition, the association suggested an increase in the use of leasing and hire purchase in the public sector.
