The new FCA regime is in my view the best thing to happen to the debt management and short term loan industries and I can’t wait!
As a business operating in these sectors all we ask of a regulator is clarity on acceptable practices and specific warnings on any unacceptable practices and over the last six months that is exactly what we have got from the FCA.
The detailed guidance on the expected standards both the debt management and the short term loans industries must adhere to has been like a breath of fresh air. The OFT were not particularly good at communicating their expectations which was frustrating to those of us building businesses in these sectors. What’s even better is the FCA seem to understand the industries and have immediately tackled some areas that needed addressing.
All lenders will now need to make an assessment of affordability before paying out a loan. We’ve been so frustrated by other lenders tarnishing the industry and paying out loans to consumers who clearly could not afford to repay a loan for years. I just hope that the bottom end of the short term loa sector adapts their product offering to keep them complaint and that the whole of that sector does not get pushed under ground towards illegal money lenders.
There will now be no excuses for any short term lenders using continuous payment authorities CPA more than twice without then conferring with the debtor. This should put a stop to the more unscrupulous collection practices that have also been harming the reputation of the sector.
The debt management sector has needed an overhaul for years to prevent what has now become an outdated and unacceptable practice of charging an initial set up fee to a potentially financially stressed and vulnerable consumer.
One of the main reasons valour financial management chose to adopt the debt management protocol standard was to stop this practice, however until the FCA completely eradicate this practice it has led to a completely unfair market place with some protocol compliant providers staggering fees over six months and others charging as much as the first three months contribution as a set up fee.
Now finally after April consumers can hopefully expect a similar fee structure and service as they should expect from any regulated industry.
Mark Bowker
