The review chaired by Christopher Woolard into change and innovation in the unsecured credit market has now launched a Call for Input. The market this covers includes credit cards, personal loans, overdrafts and buy-now-pay-later products. The review will focus on the role of financial regulation in the unsecured lending market, taking into account recent market changes, including the impact of the COVID-19 pandemic. Responses to the Call for Input are due by 1 December 2020. It is intended that the report will be finalised in early 2021.
Scope of review
The purpose of the review is to:
- examine the current state of the unsecured credit market in the UK including the component parts and recent changes in size and scale;
- examine changes in regulation and compare likely harms or dynamic effects in areas that have been subject to regulatory oversight in recent years from a variety of bodies;
- examine the immediate effect of coronavirus on demand for unsecured credit and the role of credit information;
- report on trends and potential future pressures;.
- identify areas of growth in consumer demand for credit; and
- make conclusions and recommendations to the FCA board on:
- managing harms;
- any gaps in understanding or data;
- potential regulatory changes;
- potential changes to the overall system the FCA may wish to consider with other authorities or government;
- possible innovations to support a sustainable market; and
- to compare international approaches to these issues where relevant.
Call for input
As part of the review, market participants including both consumers and firms have been invited to respond to a call for input that was published on 2 November. The review is considering the growing market in unregulated products as part of its remit, for example buy-now-pay-later companies and salary advance schemes.
An Advisory Panel will support this work and the FCA will also host a series of Roundtables linked to the Review which we understand will be held on 11, 17 and 24 November.
The call for input asks market participants questions under four headings:
|
Drivers and use of credit |
To understand how different types of consumer engage with the unsecured credit market, including reasons for using credit, how credit is presented, how credit is marketed to different groups and changes in the ways consumers interface with lenders. |
|
Change and innovation in the supply of credit |
To explore the ways unsecured lending market is changing and the extent to which innovation is in consumers’ interests. Arrangements that are currently unregulated such as buy-now-pay-later arrangements and salary advance schemes are of particular interest. |
|
The role of regulation in unsecured credit markets |
To explore the impact of regulation in terms of outcomes for consumers, and whether this is consistent across similar products. |
|
The impact of COVID-19 |
To seek information on the impact of Covid-19 on the market and to consider whether measures introduced as part of the FCA response to Covid-19 may be relevant beyond the pandemic. |
and then 