THE REGULATORY LANDSCAPE
ACCTA UPDATE ON ACCESS TO CREDIT

CCTA

t the end of last month, we passed our anniversary. We were formed in 1891 by a small group of retailers and lenders that saw the need for new regulated credit products. This was well before the Consumer Credit Act, so we were involved in the development of the regulation around Hire Purchase and similar regulations as we moved into the 1900s.

Since its inception, our association has been at the forefront of advocating for regulated credit. From its earliest years, the association played a vital role in setting industry standards and ensuring consumers were protected from predatory lending practices.

We have adapted over time. During the 1960s we picked up the direction of travel and became the Consumer Credit Trade Association. At that stage, we were involved in discussions around legislation that we have been working with for over fifty years.

Nowadays, and despite those regulatory changes, many of our members continue to use the Hire Purchase product that we lobbied for when we were first formed, especially in motor finance. We also regularly talk about how our members provide access to credit, often when individuals are badly served by more mainstream lenders.

While we didn’t go to a big party for our anniversary, if you have heard me speak at events over the last few weeks you will have heard me talk about our past. The longer version of the story has a reference to the White Sewing Machine Company being one of our founding members. This is because back at that time, the big domestic purchase of the day wasn’t the tumble drier or the motor car, it was the sewing machine.

I was even able to mention our anniversary in the committee rooms of Parliament when I contributed to the launch of the report on the growth of illegal lending by Fair4All. The launch was hosted by Paul Maynard MP. As a member of the sounding board for the research, I welcomed the report that made clear the growth in illegal lending and its link to the demise of regulated credit. I also spoke about the changes that came with the Consumer Credit Act. I think it is fair to say that we are now going through another time of considerable change.

While they may not have wanted to introduce Consumer Duty, the FCA has taken this and run with it. We have long been travelling down a path towards a focus on principles. The issue with this is that there is a real risk of uncertainty. Principles are usually short in detail and large in scope.

That means they need to be broken down and for the principles to be interpreted. I mentioned affordability earlier. Anyone who has been involved in discussions with the FCA will know that they have interpretations. They have views on what information is required, and in what situations, how information should be gathered and when it needs to be verified.

I think the FCA are still reluctant to accept that there is a link between the fall in regulated credit and the rise in illegal. We have heard them refer to their own research that would suggest illegal lending is now lower than it was a decade ago. I think that is now an unsustainable position.

Before long, we have an unwritten rule book in certain sectors. The problem is that it is unwritten and so the discussions happen behind closed doors. That is not great for certainty. Alongside this, another move in this direction comes from the current work on the review of the Consumer Credit Act. The suggestion is that more of the legislation will be passed into the FCA Handbooks.

Once again, the problem is that we rely on the interpretation of regulators. This is something that can alter from team to team, or even from week to week as a regulator changes their mind.

Looking wider at our advocacy work, over the years, the CCTA has worked hard to be a trusted authority within the consumer credit industry. We meet regularly with the FCA, the Financial Ombudsman, and the consumer credit team at HM Treasury.

By providing a unified voice for our members and engaging in constructive dialogue, the CCTA has played a pivotal role in shaping the regulatory landscape. I will take this opportunity to thank all our members for their support. It is only with the engagement of lenders that our association can continue.

We are always looking out for more members, and if you know of other lenders that should be part of our association then please do send them our way.

The CCTA’s 132-year journey is a commitment to that founding mission. As we embark on the next chapter, you can be sure that we are going to help shape the future of consumer credit.