Exchanges between the regulator and SME lenders can sound like a stuck record at times, with lenders complaining the FCA is over-regulating and forcing them out of business. However, this time we’re very happy to applaud the FCA for recognising the need to keep the regulations proportionate.

The level of fact-finding and future scenario-modelling for a personal loan of £500 cannot be the same as for a loan of £500,000. The costs of the fact-finding alone would dwarf the size of the actual loan. Hence, the FCA needs to strike a balance if it wants specialist SME lenders to stay in the market and non-prime consumers to be able to access specialist loans designed around their particular needs.

The devil is in the detail, of course, and lenders will need to look at the technical changes being made to the FCA Rulebook. But, on the basis of what we’ve read so far, we’re encouraged the FCA sees a role for our sector in the credit marketplace and recognises the need to keep the level of regulation at a manageable level.