The FCA has been concerned with the cost of credit for some time and yesterday announced a review into the industry. It has released a Call for Input paper seeking views and evidence from a range of stakeholders by 15 February 2017.
The review will focus on payday loans, home-collected credit, catalogue credit, some rent-to-own, pawn-broking, guarantor and logbook loans.
However, the FCA is keen to flag that other credit products may well be high-cost, especially when provided to less creditworthy borrowers. As a result, those firms providing overdrafts, motor finance, credit cards, overdrafts and instalment lending may also find themselves under the microscope.
This move follows a cap being introduced from January 2015 on the charges for payday loans or other 'High Cost Short Term Credit', which will be reviewed as part of the FCA's process.
The regulator considers that it has an important role in protecting consumers within this sector and highlights that 800,000 fewer people took out payday loans since it took over the regulation of the sector in April 2014.
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