Features | 23/07/21

As we move into the second part of this year, I continue to use this column to provide an update on where we are with some of the changes at the Consumer Credit Trade Association as well the challenges we all face as a sector and how you can help us. You will have seen that the association continues to make changes to the way in which we work. CCTA Magazine has altered and will continue to do so with every edition. Elsewhere, communications are also being improved.

Our aim has been to return to three missions that drive the Consumer Credit Trade Association and create true value for the members. The first being our focus on advocacy. The CCTA is determined to create a stronger voice for our members. This has always been at the core of our association.

We were established 130 years ago to represent our members, just as the regulation around new forms of credit were being developed. It is just as important that lenders have their say on current laws. Similarly, we have always been a source of information. We want to be a source of insight, much of which comes from discussions with officials, regulators, and politicians. Through new channels of communication, we want you to receive helpful insights at the right time.

Third. We want to create a network that is helpful to you. This will allow you to share experiences. Recognising that you are competitors, and these conversations need to be carefully handled. That has been harder with the restrictions of Covid-19, but we hope to get back to CCTA events soon.

Across our broad membership the experience varies but everyone is surely aware of some of the pressures that exist. For some sectors this comes from the unpredictable impact of Covid-19.

Those of you that attended our online Summer Summit will have heard about just two of those many impacts, both the economy and the regulatory expectations. The economic issues are apparent, with the complete lock down of many sectors. One issue that has emerged is the polarisation of financial impact. For some, this has been the most difficult of times, for others it has been a time to pay off debt and build up their savings.

You will find many financial predictions but there is a great deal of uncertainty. There is a growing consensus that the Government support schemes may have delayed some of the worst consequences. However, everyone seems to be holding their breath to find out what is going to happen next.

In our discussions with the FCA they make clear that this will be high on their agenda and that much of their work will continue to look through the pandemic prism. How could it not be? This will ripple out for years to come.

For other firms, especially in high-cost credit, there has been regulatory pressure around issues of affordability and relending. This dates to before Covid-19, some sectors were already facing challenges, others could see first the indications of problems to come.

When the news came that Provident Financial had decided to exit the home credit sector after 140 years, it was shocking, but unfortunately not a surprise to those watching alternative lending. It mirrors what took place in the sector a few years ago with high-cost short-term credit, previously known as payday lending.

What first occurred in the high-cost short-term credit market has now spread to home credit and guarantor lending within only a few weeks of each other, as the future of Amigo Loans now looks uncertain. These are not firms on the edge of the market avoiding the
regulators. These were front-of-centre companies shaping their
markets. Surely this poses questions as to the conduct of the
regulator during this period.

Unfortunately, the current regulatory framework is not working for the alternative lending market or its customers. In a principles-based system, so much relies on the interpretation of broad statements. The idea of adding another layer, with the Duty of Care has to be deeply concerning for anyone with experience of current regulation. At our recent CCTA Council meeting we talked about how we tackle the challenges we face. They highlighted their concerns about this more recent regulatory proposal.

One of the great strengths of our Council is that it brings together a range of individuals that either lead or advise alternative lenders. Within that group are experiences and thinking that assist us with our strategic approach. That strength grows when you consider the size of the Consumer Credit Trade Association and the breadth of our membership. That is a depth of experience which places us in an expert position and supports our work.

One of my biggest concerns, a frustration on many occasions, is that there continues to be a lack of understanding of the customers we serve and the financial need that you meet. I often think that this is the source of many misconceptions, the reason for regulatory initiatives that do not truly reflect the best interests of the population served by CCTA members.

So, our appeal to our members, lenders, brokers, and associates is for your help in building our association and our messages. You will see more calls for information, and your help is of great value.

Tell us more about the customers you serve, the ways in which you help them move forward. And tell us about the things that concern you. Bring our attention to the issues
you believe would be of interest to others. Both problems and opportunities.

We are keen to hear from you. So, keep talking to us.

Jason Wassell