Co-manufacturing – Consumer Duty
Co-manufacturing under the Consumer Duty

Published 18 July 2023

In this article we provide an overview of co-manufacturing under Consumer Duty and some of the primary considerations for consumer credit firms. WHY IS IT IMPORTANT? Where parties are co-manufacturing a product within the scope of the Duty they are required by PRIN 2A to agree in writing between them how they will jointly discharge their obligations under the Duty in respect of that product. This must include, but may not be limited to, their respective responsibilities in relation to product governance and price and value assessments. Failure to do so will amount to a breach of the FCA’s rules. The overriding purpose of the requirement is to enable the FCA to identify the parties’ respective responsibilities for the product design, approval and fair value, particularly in cases where issues or harm is identified. WHY IS IT CHALLENGING? The FCA has defined the concept of manufacturing broadly. As a result, it can be challenging to draw the line between merely distributing products and having a hand in manufacturing them. Intermediaries, particularly those whose main business activities are not regulated, may not have considered whether they are co-manufacturers of consumer credit products that they distribute. There is no one-size-fits-all answer; it is impossible to provide a definitive guide to every scenario and the classification of individual arrangements will turn on their facts. Firms should work with the other parties in their distribution chains to reach a shared view on how their respective activities should be classified. While daunting, this exercise provides an opportunity to clearly define and delineate roles and responsibilities within distribution chains and to update contracts, governance, and oversight practices accordingly. KEY DEFINITIONS AND CONCEPT OF CO-MANUFACTURING Under the Duty a “manufacturer” is essentially defined as a firm which created, developed, designed, issues, manages, operates, carries out, or underwrites a product. A “distributor” is a firm which offers, sells, recommends, advises on, arranges, deals, proposes or provides a product. The term “co-manufacturer” is not defined, but FCA commentary in FG22/5 clarifies: “A firm would be considered a co-manufacturer where they can determine or materially influence the manufacture of a product or service. This would include a firm that can determine the essential features and main elements of a product or service, including its target market.” In its March 2023 Dear CEO Letters about Consumer Duty to the motor finance providers portfolio and the credit brokers portfolio, the FCA stated that it expects firms to be clear about their roles in the distribution chain. Reiterating its comments in FG22/5 (above) about co-manufacturing, the FCA highlighted this example: “If a lender negotiates an APR price-point with a dealer or broker firm, the firms may need to consider whether the lender is making the pricing decisions or if the dealer or broker has a material influence on this”. TOP TIPS: FACTORS TO FOCUS ON Firms should focus on the materiality of the influence a distributor exerts over the main components of the product, how it is delivered and to whom. In most …

Brach of contract
What is a material breach?

Published 18 July 2023

Whether a breach of contract is ‘material’ (or ‘substantial’ – in this context, the terms are generally interchangeable) can be difficult to ascertain. But the answer can have a major impact on the consequences flowing from such a breach. The issue crops up often in commercial disputes. In this briefing, we explain how the approach adopted by the courts can offer practical assistance for contract negotiators and commercial parties. BREACH OF CONTRACT: BACK TO BASICS The basic, common law position is that a contract can only be terminated if the actions of a breaching party go right to the core of the contract and substantially deprive the innocent party of the benefit the contract was intended to confer. Such a breach is also known as a repudiation, or a repudiatory breach. To allow termination, as opposed to just financial compensation, for breaches which are less drastic than repudiatory breaches, but that nevertheless still have a significant impact, parties often agree express terms providing for termination in the event of a material breach of contract. But what constitutes a ‘material’ breach? BREACH OF CONTRACT AND MATERIALITY: KEY PRINCIPLES There is no universal legal definition for material breach of contract. Meaning will therefore be a question of interpretation. Over time, the courts have adopted a varied approach to interpreting materiality: • In National Power Plc v United Gas Co Ltd (1998), the court held that a material breach of contract was a breach that has a serious effect on the benefit that the innocent party would have otherwise derived from the contract. • In Crosstown Music Company 1, LLC v Rive Droite Music Ltd (2009) the court considered that the concept of materiality, as opposed to triviality, has to be measured in the context in which the question arises – that is, the total factual matrix, covering the terms of the contract and the circumstances of the case. • In Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust (2013) LJ Jackson stated the phrase ‘material breach’ “connotes a breach of contract which is more than trivial, but need not be repudiatory … Having regard to the context of this provision, I think that ‘material breach’ means a breach which is substantial. The breach must be a serious matter, rather than of little consequence”. • Along similar lines, in Mears Ltd v Costplan Services (South East) Ltd (2018), material breach was held to be somewhere between not trivial and sufficiently serious to be repudiatory. • In the recent case of Stobart v Esken (2022), it was held that there had been no material breach because the sorts of breaches committed could have been put right in the future. • The same principle was applied in the recent case of RiverRock European Capital Partners LLP v Harnack (2022). Dissolution of a company was found not to constitute a material breach of contract since the company could be restored to the register. ASCERTAINING MATERIALITY: THE CORRECT APPROACH How can a …

Keeping up with the times
The impending review of the Consumer Credit Act

Published 18 July 2023

“Modernise, modernise, modernise!” seems to be the Government agenda for reform of the Consumer Credit Act 1974 (CCA). It is widely agreed that the existing regime is outdated, complex and restrictive for both lenders and consumers alike and reform is needed to bring in legislation that is forward thinking and in line with the operation of today’s financial services market. Since the CCA’s implementation over 50 years ago, we have seen significant changes in consumer habits, such as the introduction of buy now pay later credit, the creation of new payment technologies and a surge in online ordering. The market has long complained that the current rules are no longer fit for purpose and need to be dragged into the modern world of ApplePay, Klarna and Amazon delivery. The opportunity for reform is widely welcomed and industry reports seem to agree with the principles which are directing the review. So what are the principles that lie behind the Government’s thinking? FLEXIBILITY AND ADAPTABILITY To keep pace with market changes, one of the primary goals of the Government’s CCA reform is to transfer regulation from statute to the FCA Handbook. There were enforced changes to the CCA in 2014 when the FCA took responsibility of the market from the OFT and as part of this, certain provisions were moved to the FCA’s remit. However, the reform was piecemeal and many agree unsatisfactory. The rationale for extending this exercise is to modernise and streamline regulation for the benefit of consumers and business and allow for quick amendment to move with market demands and trends. However, this is a double-edged sword. There is a compliance cost for rule changes and upkeep, and this is placed at the door of funders. Funders have already seen hikes in their annual fees and levies and it will be of great importance to them that this doesn’t become a default position. Although a full overhaul is a great opportunity to review and update some of the pre-existing CCA rules, we are also cautious if greater power is given to the FCA, will this require additional oversight? Will there be an increased cost to lenders? As always there is a balance to be struck between protecting consumers and ensuring that the market functions properly and competitively. CONSUMER HABITS AND ENTERPRISE Consumer habits and requirements are changing. There has been a move to subscription services rather than traditional borrowing, with less importance placed on “ownership”. There is a real complaint that “it takes credit to get credit” and that the Gen Z percentage of the market are barred from credit products due to income and tight algorithms regarding ability to repay. This end of the market are more incentivised to explore more digital and creative markets and expect their funders to be as agile and big thinking as them. To combat this, the Government is seeking views on whether the existing business lending scope needs to be changed to reflect these social changes. Currently, sole traders and small partnerships …

Rising to the occasion
Steps to maximise your membership

Published 18 July 2023

The start of the year was a busy time for CCTA membership, as many of our members came up for renewal during the first few months. I want to thank all of those that have renewed, and also pick up on some ideas about how you can fully utilse your membership. Setting aside a few minutes to periodically carry out the following actions will ensure you get the most from CCTA. KEEP YOUR TEAM INFORMATION UP TO DATE As attitudes to job tenure continue to evolve, it is becoming increasingly important to ensure that your membership is managed by an active member of your team. Ask yourself: Do you have access to the Member Hub on our website? Do you know who is receiving information from CCTA? You can update your team information at any time from the Update your Details page within the Member Hub. This helps to ensure that key information such as important updates, publications, industry news, and CCTA event details are being sent to your current team. Most importantly, if the Principal Contact for your membership is leaving your firm it is essential that a new Principal is put in place. MAKE US AWARE OF YOUR LATEST PRODUCTS The Update your Details page also lists the products you are currently offering. Please update this information when you move away from a product or begin offering a new one. Keeping this data across the membership accurate allows us to allocate our resources in a proportionate manner. ENGAGE WITH OUR SURVEY REQUESTS It is hard to take any action now that doesn’t result in being asked to complete a survey shortly afterward. We understand that a survey request email will never be flagged as a high priority for members. However, I would implore you to provide us with your feedback. Our surveys are not a box-ticking exercise. The information we receive is considered when making decisions about various future plans and projects. As an example, the data gathered from the 2022 conference feedback survey has been used to adjust our 2023 conference plans accordingly. The most recent feedback request was actioned by 7.3% of the membership. This is encouraging but pushing this percentage up will help ensure that our data is more representative of the membership as a whole. RESPOND TO REQUESTS FOR INFORMATION Our member communications are grouped into categories, one of which is “Response”. A CCTA Response email is used to request opinions or feedback from members. As an example, this year we asked members to provide us with any issues, concerns or questions about the implementation of Consumer Duty. The responses were then discussed directly with the FCA (without naming individual firms). The reason for highlighting our Response emails in particular is that they feed directly into one of our key missions: advocating on behalf of our members. Our objective is to support the development of a sustainable, effective, and well-regulated market. Our work with policymakers, regulators, government, and stakeholders is guided by the feedback …

The moving parts
A political review

Published 18 July 2023

The summer parliamentary recess is a good moment to appraise where we are in national politics and consider what might be in store for CCTA members in the second half of the year. It has been a tumultuous six months for the Prime Minister. Following the calamitous Liz Truss interlude, Rishi Sunak delivered impressive early ‘wins’ that suggested his brand of brisk managerialism could chart a narrow path to victory for the Tories in 2024. He sought to capitalise by announcing Five Pledges – halving inflation, lowering waiting lists, cutting debt, growing the economy and, most controversially, stopping the small boats. The pledges were regarded as easy – designed to be hit so that, in time, he could come up with five harder ones. It now looks like he’ll score zero out of five. There might still be a path to victory, but it is vanishing. Sir Kier Starmer is enjoying more luck. It isn’t easy to get a hearing in opposition, but nor do you suffer the collateral damage caused by missed pledges. As one Labour insider put it, Starmer’s task is like carrying a Ming vase across a highly polished floor. In other words, he will win so long as he doesn’t screw up. As befits an opposition leader with a big poll lead, Starmer is light on policy. He too has made five pledges, or ‘national missions’, covering broadly the same ground minus the small boats. The priority for Starmer is projecting competence and professionalism. Expunging the negative brand associations of the Corbyn era is key, hence some heavy-handed side-lining of left-wing elements in his party. Labour strategists are laser-focussed on avoiding a rerun of 1992 when Labour led the polls but stumbled at the finishing line. Starmer is no Blair, but does that make him a Kinnock? Time will tell. In the realm of credit and debt there have been notable developments. The Financial Services and Markets Act has received Royal Assent. This is largely a post-Brexit, pro-City measure to repatriate regulatory powers and boost competition. It also boosts financial inclusion by safeguarding access-to-cash and enabling credit unions to offer more products. Opposition parties sought amendments to increase the FCA’s accountability to Parliament and oblige the regulator to ‘have regard to’ both financial inclusion and ‘net zero’ targets as part of its operational objectives. Ultimately, these amendments were defeated, but the debates gave an indication of FCA and Treasury priorities for the period to come. If further confirmation were needed, they showed that Consumer Duty will be the weapon of choice for the FCA. The call for a statutory financial inclusion objective was rejected because ‘the Consumer Duty will adequately cover the same ground’. Further safeguards on bank branch access were deemed unnecessary because ‘banks are bound by Consumer Duty’. You get the picture. The FCA is wielding the Duty in other areas too. The regulator is monitoring the speed of banks’ pass-through of interest rate rises to its savings customers. Its stick of choice? You …

A helping hand
The CCTA Advice Line for members

Published 18 July 2023

As many of you know, I am the Head of Policy and Advice at the CCTA and much of my role entails support and guidance for our members. The publication of our magazine gives me the opportunity to update you all on key developments, not only within my role but across the CCTA as your trade association. I have previously talked about training and development and, whilst this has been progressing in the background, we aim to provide further details of the launch of CCTA Academy at our Annual Conference in September. However, I wanted to take this opportunity to talk about another one of our key services – Advice Line. The Advice Line service is key tool as it allows members to utilise CCTA knowledge and experience of all matters that affect our sector. We recommend members to use CCTA as a sounding board on a wide variety of topics and subjects. Part of my role is to manage the Advice Line service and, based on your feedback, I know that this is a very valuable service to many of you. For the benefit of new members and those that have not yet used the service, Advice Line is free and only available to members. It can be used to ask for CCTA views, support or guidance on any issues or topics affecting members. This can include business specific matters such as internal policies and procedures, as well as regulatory, legislative and economic matters. Accessed through our Member Hub, members can put forward any questions, comments or concerns and we look to provide the appropriate support and guidance where possible. To provide some context, in 2022, we received 59 requests from our members for support or guidance. These requests included questions, queries or concerns in relation to a range of matters including CMCs, affordability, Consumer Duty, agreements, FCA Handbooks, the Consumer Credit Act and member-specific business questions i.e. policies, procedures and processes. Prior to 2022, CCTA were able to provide the requested support or guidance within four or five days. For 2022, we set a timeframe of a three day response time. I am happy to announce that we were able to respond to 98% of requests within three days last year. Given the positive feedback on prompt responses, we maintained a target timeframe for responses of three days for 2023. We also improved on the level of insight and detail provided in our responses which members have found very useful. This has had a significant positive impact on the use of our Advice Line service. For the first six months of 2023, we have already received 46 requests for support. Again, these have been in relation to a wide variety of matters and topical issues. Of course, some matters are more complex and ongoing than others but, I am pleased to confirm that we have managed to provide an initial response within three days to 100% of these requests. We are here to support you, as and when …

A seat at the table
A call for unity in fostering financial inclusion

Published 18 July 2023

Some allege we, at GAIN Credit, are the biggest villains in the UK. We have, in Lending Stream, one of the biggest high-cost lending books in the country. At least once a month someone, maybe a politician, maybe a charity spokesperson, calls us ‘loan sharks’ and demands our immediate banishment from the lending ecosystem. I don’t accept that portrayal. Instead, I believe our existence is not only justified but also crucial in providing accessible financial solutions. June saw some welcome research. Fair4All Finance and We Fight Fraud highlighted how ‘illegal lenders are flourishing in the credit vacuum left by the departure of high cost yet regulated lenders’ and that ‘The unintended consequence is that millions of people who can well afford to repay a fair loan are left with fewer safe options.’ Further research from IPSOS suggested over three million people in Great Britain may have borrowed from an illegal moneylender in the last three years. Together, this research highlights the magnitude of illegal lending and throws light on the real ‘loan sharks’ lurking in the financial depths. It is time for politicians, commentators, NGOs, and industry to make a decision. Should a substantial demographic be denied access to credit, even when they can afford it? This isn’t about people spiraling into debt or living beyond their means, but rather about offering solutions to ordinary individuals faced with unanticipated expense. Are we to exclude individuals for lacking a credit history, for past difficulties or for borrowing more frequently than others deem acceptable? The House of Lords obviously think financial inclusion is important, maybe they are right. If we truly care about empowering individuals and enhancing their financial stability, credit must be accessible to as many as possible. Credit unions and Community Development Financial Institutions (CDFIs) have a role to play, but so do regulated commercial offerings. If we foster an environment hostile to regulated lenders, then the doors are thrown wide open for illegal lending – the true loan sharks – that thrive on intimidation, a lack of consumer protection and no interest rate caps. It’s time for critics to replace blanket condemnation with productive dialogue. Together we can craft lending models that are fair, affordable, and inclusive. To do that, we need to be offered a seat at the table. I am proud of what we do as a firm – we help people that are often overlooked by others. I believe as a sector we can also be proud. We may never get classed as heroes but maybe, just maybe, we might be invited to form part of the solution.

The regulatory landscape
A CCTA update on access to credit

Published 18 July 2023

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 …

Braking point?
What the cost-of-living crisis means for the car finance sector

Published 17 July 2023

THE COST OF LIVING CRISIS IS CHANGING THE FACE OF DEBT “Problem debt only affects people on low incomes”. That’s a misconception we hear at StepChange Debt Charity on a regular basis. But now more than ever, it’s just not the reality we see every day. The unprecedented squeeze on consumers caused by the cost of living crisis is changing the profile of customers we support in profound ways. In 2022, six million people visited the StepChange website for support, and in May this year, demand for debt advice was up 8% versus the previous year, and up 24% versus May 2021. An increase of this magnitude shows that the crisis is not only affecting low-income groups, but that increasingly those who may previously have been financially comfortable are now falling into debt. And we know, whether it’s shame or stigma, or fears about their credit score and access to credit, customers can be hesitant to reach out for help. At StepChange we regularly analyse our client data to identify trends in the debt advice sector and share this with our partners to help them better identify and support customers in need. In our recent report, ‘Why debt advice matters in the car finance sector’ we explored our client data in detail which showed a number of concerning trends for the automotive finance sector. And amid the economic backdrop, unfortunately the worst is likely yet to come for customers who may not be well-equipped to weather the storm. MORE CUSTOMERS WITH CAR FINANCE NEED DEBT ADVICE There’s no doubt that the growth of Personal Contract Plans have fuelled the growth in finance penetration we’ve seen, enabling consumers to finance cars at more affordable monthly payments than traditional Hire Purchase. This means 84% of cars are now bought on finance. However, with the current pressures on household finances, car finance repayments are now becoming challenging for more households. At StepChange we’ve seen a 61% increase in the number of clients with an outstanding car finance debt since January 2020, which accounts for a 14.8% increase in the overall proportion of our clients who have a car finance debt. The average balance of this debt has risen by 20% during this period and concerningly, our data indicates that customers with a car finance agreement may be more vulnerable to additional financial detriment. CHANGING PROFILE OF CUSTOMERS: MORE DEBT AND MORE VULNERABLE TO INTEREST RATES Our report shows that clients with a car finance agreement tend to have incomes around 30% higher than our average client, perhaps unsurprising given car finance is predominantly considered a prime product. However, despite this increased income, their monthly surplus of £162 is just £62 higher than that of our average client. Despite having low monthly surpluses, these customers are far more indebted, with over £4,000 more in unsecured borrowing than clients without car finance. Perhaps most worryingly, it shows that car finance clients are over 80% more likely to have a mortgage and our analysis shows that …

Open banking in action
Greater flexibility and automation to benefit lenders

Published 17 July 2023

From streamlined collections for lenders to increased financial control and tailored repayment options for borrowers, including open banking payments as part of a customer-centric collections strategy is paving the way for a more inclusive and secure lending ecosystem. But what are the practical applications of open banking in the credit collections process? The majority of individuals in the UK currently possess more than one bank account. Acquired.com recently conducted an online poll and found that 93% of respondents have more than one bank account, with 39% having more than four bank accounts. We can therefore assume that an individual’s funds are distributed across multiple accounts, with no singular account holding all their assets. Consequently, the account associated with their Direct Debit (DD) or Continuous Payment Authority (CPA) set up for credit collections may not always be the account which has available funds – this is where open banking comes in. Introducing the option to pay via open banking from a different bank account than the one linked to their CPA or DD allows borrowers to make loan repayments from an account of their choice, enabling them to manage their cash flow more effectively. This benefits both the lender and the consumer. Open banking also enables borrowers to have the flexibility to select the repayment amount within their means. This set up ensures that the lender can collect repayments effectively, while also safeguarding the consumer’s financial well-being by allowing them to pay back only what they can afford in a given month. From a lender perspective, open banking payments have a lower failure rate compared to direct debits or card payments. Our payment transaction data found an average acceptance rate for Open Banking payments of 97% compared to 70% for standard card authorisations (Source: The Acquired.com Hub). Open banking also relies on secure APIs (Application Programming Interfaces) to initiate transactions directly between banks, eliminating the potential for manual input errors or outdated payment details. The automated nature of open banking payments significantly reduces the likelihood of payment failures, the associated inconvenience, and potential fees. The combination of lower failure rates and instant settlement offered by open banking payments ensures that borrowers can make affordable and reliable payments, reducing the risk of missed or late payments that may negatively impact their credit score. The efficiency and speed of open banking payments contributes to a smoother and more seamless borrowing experience for borrowers and lenders alike. Acquired.com have developed their own proprietary open banking solution, Pay by Bank. They also offer payments via card and digital wallets. Get in touch if you are interested in optimising your payments ecosystem.

Minister talks about access to credit

Published 20 April 2023

We are always interested in hearing from Andrew Griffith, Economic Secretary to the Treasury. He is also referred to as the city minister because financial services fall within his area of responsibility. So when he spoke at the Mansion House about Financial Literacy and Inclusion, it was good to hear him talking about the importance of access to credit. It was even better that he recognised the role that the Government and regulators have in the supply of credit. We talk to many investors, especially international ones, concerned about what is happening with UK FS regulation. We agree fully that the best intentions can lead to regulations that will increase financial inclusion. His reference to the problems with affordability is one that we welcome. Affordability was a bad experience for many lenders. Affordability is an excellent example of a regulatory obsession that has gone off track. Unfortunately, arrears and defaults are part of lending, at the core is an understanding of risk. These happen when people encounter the unexpected, the loss of a job, a boiler breaking down an illness without sick pay. No affordability test will prevent these from causing problems for a borrower. Many people live with the cost of credit, adapt to their position, pull back from some expenditures at times, and look for new ways to bring in income like working an additional shift. Over the last few years, we have seen the development of a model that does not take this into consideration. So what we have seen is the exiting of many firms from the market due to regulatory issues, along the lines set out by Mr Griffith. More than a million people use illegal lenders in the UK. This fall in access to credit is not without consequence, elsewhere organisations like the Centre for Social Justice are telling us that over a million people in England are using illegal lenders. We are happy to play our part in attempting to tackle the growth of illegal lending, and it was not that long ago that we sought to create stronger connections between our members and the illegal money lending teams. Including carrying a piece in our CCTA magazine and running a workshop for our members. Later Mr Griffith refers to a return to the concept of “caveat emptor” or buyer beware. That is certainly not the direction the FCA has been moving in recent years. Increasingly the responsibility rests with the lender and away from the borrower. Consumer Duty is the most explicit demonstration of this, as the responsibility for a good outcome sits with the lender. The customer really is a passenger on this journey. We could get into a much longer discussion about “agency”, but that is for another day. But there is agreement. To end on a positive note, everyone agrees that we should do more to increase financial literacy. We need everyone to understand more about the options available to them, the benefits and the consequences if things go wrong. …

Increasing regulatory burden leads to a drop in regulated supply

Published 13 April 2023

We are currently reviewing the FCA Strategy to determine its implications for our members. That is being considered alongside the FCA’s proposed regulatory fees and levies. Too often regulators set rules that work well for the big banks and mega insurance companies. The FCA often fails to recognise the important part played by smaller firms and that increasing regulatory burden needs to be considered. There has been a decline in UK-regulated credit for many as lenders exit. The CCTA has been pointing to the decline in regulated credit as more alternative lenders leave the market. These are lenders that are not easily replaced so families across the UK have fewer options when it comes to credit. The Centre for Social Justice has highlighted the growth of illegal lending in the UK. They travelled the breadth of the country to understand where and how illegal lending takes place; commissioned polling of over 8,000 UK adults; compiled and analysed the largest sample of known victims to date; and heard first-hand the powerful stories of those exploited, often by ‘friends’ who turn out to not be friends at all. More than a million people using illegal lenders in the UK In England today, they estimate that as many as 1.08 million people could be borrowing from an illegal money lender. We believe this is the first independent evidence that shows loan sharks circling as we see regulated supply drop away. There are those that try and create an equivalency, between non-prime and illegal lending. However, there is a chasm in terms of the protections provided by regulated lenders and the threats that often come from organised crime involved in illegal lending. Anyone finding themselves in trouble with an FCA-regulated firm knows that they can rely on consumer protection rules. Ultimately they can turn to the Financial Ombudsman or the courts. Those borrowing from illegal lenders have no such comfort and can become embroiled in further criminal activity. The CCTA will be reporting back on the increasing regulatory burden and other issues at the upcoming Summit on 26th April 2023.  If you are a member, then sign up. CCTA Events Diary