CCTA COMMENT: FCA – Christopher Woolard to chair review of unsecured credit market regulation

Blogs | 17/09/20

The below Financial Conduct Authority (FCA) announcement details that Chris Woolard the FCA Interim CEO, until the recent appointment of Nikhil Rathi as the new CEO, will chair a far-reaching review of the unsecured lending market that will have implications for many CCTA members.

Woolard has been instrumental in guiding the harsh regulation that takes little notice of the size of loan compared to the risk to the consumer, or the size of the risk to firms if they are hit by bogus claims. We have seen market interference on a grand scale, outside of the Banks, which is now taking away access of responsible credit to many hard-pressed consumers.

The pricing for risk model and ensuring that both the consumer and the industry are being treated fairly is being skewed too far towards consumers, to the detriment of the overall non-banking market. The Banks are moving further away from the hard working and hard-pressed consumers, in all socio-economic cohorts. Over the last couple of years credit cut-offs have been raised both in the mortgage and banking sectors.

The consumer credit industry that has served the consumer well since the 1970’s is in danger of distortion if the advisory group do not consult widely with consumers on access to credit post Covid-19, the industry on funding, the efficacy of current credit scoring models, rising bogus and unjust complaints from consumers and the CMC’s, and the rising cost of regulation to SME’s. Of major importance to the wider UK economy is household spending which is currently around 66% of GDP, this will rise as a percentage as Covid-19 issues will mean the business spending will be less.

After Covid-19 furloughing ceases at the end of October, redundancies will increase significantly, restricting overall household expenditure. Andrew Bailey ex-FCA CEO, now Governor of the Bank of England has already stated that he is willing to inject another £100bn of ‘quantitative easing’ into the economy, let’s all hope that affordability rules are being applied and that our children are not going to suffer in the future.

The recent All Party Parliamentary Group (APPG) on Alternative Lending Inquiry Report on access to credit, amongst other issues, is an important subject to get behind as an industry. The CCTA have part funded the work undertaken by the APPG and worked closely with the secretariat to the APPG with regard to the overall agenda. A full report and schedule of past and future CCTA public affairs will be on the website in the next ten days. The ‘ affordability ‘ subject is a major issue, and has been since the Office of Fair Trading, in their wisdom, changed it from ‘ credit worthiness ‘ as it was originally described in the Consumer Credit (EU Directive) Act 2010.

The industry will need to have ‘ eyes and ears ‘ on the aforesaid FCA advisory group, as Woolard has a distinct leaning towards the consumer lobby, and we need a strong counter lobby to protect the consumer, not the career consumer lobbyists.

Greg Stevens

FCA ANNOUNCEMENT: Christopher Woolard to chair review of unsecured credit market regulation

The Financial Conduct Authority (FCA) has announced that Chris Woolard will chair a review of the future regulation of the unsecured credit market, reporting to the FCA Board.

The Review will concentrate on how regulation can better support a healthy unsecured lending market. It will take into account the impact of the coronavirus on employment security and credit scores, changes in business models and new developments in unsecured lending including the growth of unregulated products in retail and the workplace. He will be assisted by an advisory group and will make recommendations to the FCA Board in early 2021.

The Review will be an important building block for the FCA’s Consumer Credit business priority, which it announced as part of its 2020/21 Business Plan in April of this year and which seeks to ensure that consumer credit markets work well.

Chris Woolard will be stepping down from the FCA Board and any executive or decision-making roles from 1 October 2020. Following the completion of the Review, Mr Woolard will be moving on from the FCA. He will not take up any external appointment until at least six months after the end of his executive role.

Chris Woolard said:
“It has been a tremendous honour to serve as chief executive of the FCA at such a critical time for the country and financial services. I’d like to thank my many colleagues over the last eight years for all their help and support. I am delighted to be asked to lead a timely and significant review where access to sustainable credit is of great importance to so many people.”

Charles Randell, Chair of the FCA, said:

“I am grateful for Chris’s contribution to the FCA, particularly during the last 6 months as he has led us through the coronavirus crisis with huge energy and skill. Chris’s deep understanding of the unsecured credit market makes him the ideal person to advise the Board on the development of regulation to support sustainable unsecured lending. Unsecured lending can be critical to helping people through tough times but can cause serious harm if it’s not well regulated.”