Treasury Committee looks at the issue of de-banking

Published 20 May 2024

Earlier this month the influential Treasury Select Committee published their report into SME Finance. The Committee contains MPs from across the House of Commons, representing all major parties. The report was commissioned to look at the recent experiences of small businesses. It was designed to consider the issue of access to finance and what else can be done to encourage business growth. The last few years have been tough for small businesses across all industries. Rising inflation has had a severe impact on costs, and a global pandemic changed things for everyone. That said, SME firms make a substantial contribution to the UK economy which should not be undervalued. For that reason, we cannot ignore that SMEs are struggling with narrow access to finance, in the face of these rising cost pressures and higher interest rates and are generally pessimistic about their ability to raise funds. Many report struggling to attract new investment for their businesses. The parliamentary committee found that small firms are being put off from innovating and growing by damaging financial regulations and inadequate support from banks. We are particularly interested in the issue of de-banking. Within the CCTA, we know that many smaller members have struggled with access to financial banking facilities. Pawnbrokers have had a particularly bad time with the issue of de-banking. Perhaps unsurprisingly, the Committee found that over 140,000 SME had their accounts closed last year. We know that access to investment and banking services are lifelines for any business. The Committee has recommended that any small business doing legitimate work should have access to a bank account. The Committee members heard that many accounts were closed because they fell into “undesirable” sectors. Pawnbroking was included here, despite being a service that has been provided for hundreds and years and helps those individuals that struggle to access finance themselves. As a result, the Committee is calling on the Financial Conduct Authority (FCA) to force banks to be more transparent about why decisions to de-bank businesses are taken. The FCA should also continue its work to better understand criteria for account closure. Committee members also believe the regulator should compel firms to send them the number of business accounts they’ve closed each quarter split by reason. The Treasury has assured the Committee that legislative changes will be introduced to crack down on the de-banking of businesses in the form of a Statutory Instrument. When questioned, the Economic Secretary Bim Afolami MP, and Treasury officials, said that the planned changes to termination rules would apply to business accounts. The plans also include extending notice periods to 90 days and having to give a clear reason for closure, except where it would be unlawful to do so. The Treasury is expected to publish regulations soon. It is good to see the Treasury Select Committee shining a light on these issues. The CCTA will engage with Treasury officials at our regular meetings to ensure the publication of the new rules is not delayed. If members have had …

Technology – the pace of change is rapid

Published 07 May 2024

Developments in technology have been back in the news in recent weeks. Open Banking, the use of data and AI have all received mentions. Though they offer exciting possibilities, these new developments need to be balanced with the appropriate checks. We are all aware of the potential unintended consequences and the lag that can occur between innovation and necessary regulation. Taken with the importance of protecting the customer and their data, it is not surprising that we have seen the FCA sharing its views on these topics. Firstly, the regulator published its Feedback Statement on potential competition impacts from the data asymmetry between Big Tech firms and firms in financial services. In its overarching strategy, the FCA is committed to identifying potential competition benefits and harms from the Big Tech firms’ growing presence in financial services, hence its research in this area. One area of concern was that the asymmetry of data between Big Tech firms and financial services firms could have significant adverse implications for how competition develops in the future. However, so far, the regulator has found that no significant harms have arisen from data asymmetry, while they work on starting to develop a regulatory framework that enables increased competition and innovation. The FCA will continue monitoring Big Tech firms’ activities in financial services. Depending on the outcome of this monitoring, the FCA plans to develop proposals for consideration in the future. Firms should also be following developments. Elsewhere we saw an update on AI from the regulator. This followed the Government’s response to its White Paper: A Pro-Innovation Approach to AI Regulation which noted the rapid growth in the use of AI and the need to develop a pro-innovation regulatory framework. The FCA has said that it wants to promote the safe and responsible use of AI in UK financial markets and leverage AI in a way that drives beneficial innovation. Their focus is on how firms can safely and responsibly adopt the technology as well as understanding what impact AI innovations are having on consumers and markets. Interestingly, the FCA has also talked about the role AI may play in regulating the financial sector. For example, it could help identify fraud and bad actors. The FCA plans to invest in technologies to monitor regulated markets. Finally, there was a speech from Nikhil Rathi, FCA Chief Executive, which picked up a lot of these themes. He talked about the need to lead a co-ordinated and effective effort to make the most of the opportunities of Big Tech – whilst mitigating the risks. He said the FCA needs to remain vigilant about data asymmetry or risk putting off incumbents and innovators from retail financial services. Rathi mentioned that the FCA is examining the case for developing a commercially viable framework for data sharing in Open Banking and finance. Open Banking remains a central focus for future development in financial services. Through all these developments you can see that the FCA is keen to embrace new technology whilst making …

FCA publishes Financial Lives Survey 2024

Published 15 April 2024

Last week the FCA published the findings of its Financial Lives Survey on the cost of living, conducted this January. The FCA uses the survey to explore the finances of UK consumers and how they would assess their own situation. The survey was carried out between December 2023 and January 2024, with under 3,500 respondents. The regulator reported that 7.4m people were struggling to pay bills and credit repayments in January 2024, however this is down from 10.9m in January 2023. This is a positive step in the right direction, but this is still higher than the 5.8m recorded in February 2020, before the cost-of-living squeeze and the Covid pandemic began. Though it appears that the cost-of-living crisis has not been as bad as some expected, over 5m people still said they had fallen behind or missed paying one or more domestic bills or credit commitments in the previous 6 months from January 2024. To counter act this most people (77% or 40.5m) spent less or worked more to make ends meet. Despite high interest rates, 50% of renters (over twice the proportion (24%) of mortgage holders) reported they were not coping financially. Renting continues to be of high cost and a struggle to many. A key objective of the CCTA is to protect access to credit. The survey didn’t really explore the credit options people had available to them but it was interesting to read about the reasons people cut back on essentials. One percent of people reported prioritising paying back a loan from an unlicensed money lender or another informal lender. A figure we know is often under reported. Also, another four per cent reported they were prioritising paying back family or friends. We also know that the line between this form of borrowing can be blurred with illegal lending. The Illegal Money Lending Team has reported in recent times that around 60% of clients believed the loan shark to be a friend at the point of borrowing. In the 12 months to January 2024, 2.7m adults also sought help from a lender, a debt adviser or other financial support charity because they found themselves in financial difficulty. Nearly half (47%) of those that sought help said they were in a better position as a result. The FCA has used the survey as an opportunity to remind firms of their commitments to their consumers. The regulator has announced that its tailored support guidance, introduced in the Covid-19 pandemic, is to be transferred over to the FCA handbook. The new rules include: expanding protections beyond customers who have already missed payments, to those at risk of payment difficulty widening the forbearance options firms should consider enhancing expectations around customer engagement and providing information including on money guidance and debt advice requiring credit firms to consider customers’ individual circumstances when providing forbearance As we have said previously, dealing with customers in financial difficulty or those with vulnerable characteristics remains a central aim of the FCA. Firms should always be referring …

FOS Annual Plans and Budget published

Published 08 April 2024

Last week, the Financial Ombudsman Service (FOS) published its final Plans and Budget for the forthcoming financial year, following a consultation that closed in January. This process takes place annually and allows for firms to feedback on plans the Ombudsman around the complaints process, and how the FOS intends to improve it. This year the FOS consulted on plans to lower fees and operational improvements. It also asked about plans to move forward with charging professional representatives, including claims management companies (CMCs), to access the Ombudsman service. Firstly, there was good news in that the FOS has decided to move forward with lowering the case fee to £650, a drop of £100 per case. They have also confirmed reductions in the compulsory and voluntary jurisdiction levy costs. This is something the CCTA has campaigned on in recent years, so it is good to see a step in the right direction around reducing the regulatory burden placed on firms. We have long argued that that is has been particularly intense for small and medium sized firms, and those that have been affected by the activities of claims management companies. It is disappointing then that the Plan doesn’t cover feedback about plans to charge professional representatives including CMCs, to access the Ombudsman service. The CCTA and several members responded to the original consultation outlining their support to move forward with charging. The FOS will now be publishing a further consultation on charging professional representatives which will outline the feedback they received and discuss next steps during the first quarter of the 2024/25 financial year. It is troubling that these plans have not moved further forward. The status quo means that there are incentives to submit complaints, regardless of the quality. We have all seen that upload rates for complaints brought by CMCs are much lower than when raised directly by the customer. So, consumers are affected by this delay also. We have written to the FOS CEO to outline our concerns around the progress of charging professional representatives. There is a danger that CMCs continue to exploit the system while the process rolls on. Especially when the expected consultation might propose a deadline for charging, or a new system which sees CMCs barrage lenders ahead of implementation. For too long these firms have been able to submit claims of poor quality, because win or lose the lender will have to pay the case fee. The reduction is in the case fee is welcome but still represents a fee of £650. This remains a huge burden on lenders. Consumers also continue to suffer as claims brought on their behalf by these firms are often not substantiated. It is time to take action to improve a system that is meant to assist those that have been treated unfairly.

Vulnerability must remain a central focus

Published 26 March 2024

We have written a few posts in recent months exploring the cost-of-living crisis, and the impact it is having on different consumers. Money worries continue to get a lot of coverage in the media, but we are also told about the recovering economic health of the country. It is difficult to assess how individuals are coping as it is dependent on their own unique circumstances. That said many are still struggling or could easily be affected by an unexpected shock to their income. Though financial difficulty is not the same as vulnerability, the two are inextricably linked, especially in the eyes of the regulator. The FCA has the issue of vulnerability firmly in its sights and it wants to ensure regulated firms are doing the same. Of course, someone could be considered vulnerable for nothing to do with their financial situation – they may have a disability or have suffered a significant life event. Firms should know they need to consider all possible angles. Only last week the regulator announced a review of firms’ treatment of customers in vulnerable circumstances. In its 2022 Financial Lives Survey, the FCA found that over 27M adults in the UK showed at least one characteristic of vulnerability. That is a significant proportion of the population. It is easy to see why the regulator is maintaining such a focus on vulnerable customers. The FCA’s review will look at firms’ understanding of consumer needs, the skills and capability of staff, product and service design, communications, and customer service, and whether these support the fair treatment of customers in vulnerable circumstances. It will also look at the outcomes consumers in vulnerable circumstances receive and whether they’re as good as the outcomes of other consumers.  As part of the review, the FCA will conduct consumer research as well as gathering information from firms and consumer representatives to make this assessment. Firms can be expected to be contacted and be asked to evidence their policies and procedures. This week a “Dear CEO letter” was also issued by the FCA to much of the consumer credit sector further underlining the need to consider vulnerable customers. The letter covered the entire lending cycle but urged lenders to lend responsibly and sustainably. They pointed to the fact the vulnerability is increasing while financial resilience decreases. With that in mind firms should ensure they are following the regulator’s guidance on fair treatment of vulnerable consumers. The introduction of the Consumer Duty should also help firms assess how they are dealing with vulnerable customers. It is about being proactive, stepping in when you can to help and support the customer. “Doing the right thing” for the customer might sound cheesy but a lot of this is common sense. Are you treating the customer like you would want your family to be treated? Are staff alert to the signs of vulnerability? Do you have systems in place to support customers that need it? These are the sort of questions firms should be asking themselves and …

 The Budget – Do the sums add up for UK families?

Published 07 March 2024

Yesterday the Chancellor delivered the Spring Budget in Parliament. The purpose of the budget is to update Parliament on the state of the economy and to outline the Government’s proposals for changes to the tax system. This was arguably the last big economic event we will see from this Conservative government. The Prime Minister has told us to expect an election by the end of this year, so it is unlikely we would see another statement before then. It goes without saying that there was a lot riding on this budget. The Conservatives will be hoping that the measures announced start to move the dial on their current ratings in the polls. Labour still maintains a significant lead. This was about appealing to potential voters. There were numerous mentions of the Conservatives being the party of lower taxation, trying to drum the message home. The big headline announcement was a further cut to national insurance. Someone earning £25,000 a year will save another £249 a year from the latest drop. This will be a welcome change for the average earners across the country, following the previous cut last November. But Sunak (when Chancellor) had previously pledged to take a penny off income tax by 2024, which hasn’t happened, so represents another broken promise. A further welcome announcement was the plan to extend child benefit to more families by raising the income level at which people start being charged for receiving the benefit. The budget included very little mention of pensions so did appear like the Government was trying to appeal to the working-age section of society. During the delivery, Jeremy Hunt said the economy was improving, having “turned a corner on inflation”. That said, there were still a range of pledges to help struggling families. These included the extension of the Household Support Fund for six months, and a longer repayment period for budgeting loans which can be used for essential items like furniture or white goods for those eligible. These proposals will help those hit hardest by the cost-of-living crisis, but no further long-term support was announced. Though the Chancellor did state that he was removing the charge on Debt Relief Orders. A welcome step for those trying to repay debts that they are struggling with. Fuel duty was frozen again, recognising the importance of not increasing the costs of keeping a vehicle running, a lifeline for many families in terms of getting to work, school and keeping businesses moving. Another welcome step was the announcement that vehicle leasing companies will benefit from full expensing with draft legislation expected soon for full expensing to apply to leased assets, representing a significant tax break. We also saw a commitment to green investment with a fund of £120m for green energy projects. Overall, a mixed bag of announcements. The Chancellor was keen to appeal voters, and historically the last budget of a government promises the most in real term gains. He may also be thinking about his own political legacy. Whatever happens at …

Is the cost-of-living crisis over?

Published 20 February 2024

Over the last few weeks, we have seen a lot of news pieces and data released about the country’s financial health and the associated impact on households. Inflation, recession, borrowing, spending, they have all been mentioned. Another phrase we have heard a lot in recent times is the ‘cost-of-living crisis’. We have been told we are in a cost-of-living crisis. A global pandemic that changed the employment status of many and war in Ukraine, causing energy prices to go sky high, resulted in many people struggling to manage their finances. To ease the burden, the Government offered support with the cost of energy, and others also qualified for separate cost-of-living payments to get through a hard winter. It’s unlikely the Government would have provided this level of support if it didn’t expect people to hit crisis point. Last week the final cost-of-living payment was paid to millions. The Prime Minister used it as an opportunity to say that the pressures were starting to ease, due to falling inflation and tax cuts. No further payments of this kind have been scheduled. Inflation might be starting to come down but it stalled at 4% in the most recent figures. It doesn’t yet feel like the economy is improving at any great scale. Last week it was also reported that the country just dipped into recession in 2023, blamed on people spending less – though apparently the figures suggest it won’t last for long, it does appear that there is very low growth. There was some good news however, as food prices have started to fall. Where does this leave family finances? There are some green shoots of good news like wages starting to rise, but at the same time debt advice providers are reporting high numbers of individuals that use their services are really struggling. New research published by Citizens Advice claims that politicians are burying their heads in the sand as five million people now find themselves in a negative budget situation. A significant proportion of society still doesn’t have enough money to make it through the month. It feels like there are now conflicting views on whether the worst is over for many, or that there is still more pain to come as individuals move off fixed rate mortgage deals and expected rises in council tax. Interest rates remain high in the hope that inflation will drop. It’s no surprise politically that the Government is telling us that things are getting better. It will be interesting to see what the Spring Budget entails early next month especially as election looms in the not-too-distant future. The Covid-19 pandemic and the introduction of the FCA’s Consumer Duty have shown that the regulator expects firms to really understand the financial position of their customers. At time when some families are struggling more than others, it demonstrates, more than ever, the need for an individual approach. It is fair to say that while things are starting to improve for some, times remain hard for …

Next steps on the Consumer Duty

Published 09 February 2024

We are now into the seventh month since the implementation of the Consumer Duty. We know that many firms continue with their efforts and focus on meeting the requirements of the Duty and achieving improved consumer outcomes. No doubt firms will agree that it has been an intensive journey thus far. It was always meant to be about delivering continuous improvement in customer outcomes, but now is also an appropriate time to remind firms of the upcoming requirements as to the next steps in that journey. We specifically refer to two requirements which should be addressed by 31st July 2024. The first year of the Consumer Duty implementation focused primarily on new and existing products/services that financial services firms offer to retail customers. Closed products (i.e. products/services that are no longer marketed or sold, but active arrangements still exist) were due to be brought into scope a year later than new and existing products. That deadline is 31st July 2024. Some firms will have already progressed work in this area and will be well on their way to complying with the requirements for closed products, when they are brought into scope. However, for those firms that still need to carry out additional work in respect of their closed products, there is still time to ensure that you have addressed the requirements by the end of July. The next requirement is in relation to firms’ annual board reports. The FCA’s Policy Statement also sets requirements for firms to produce annual board reports for the board (or governance body) enabling the board/body to assess their compliance with the requirements of the Duty and whether they are achieving good consumer outcomes. Annual board reports should comprise of data and insights (MI) from all areas of the business (i.e. product design/development, marketing, sales, customer service, complaints etc) to provide an overall view of the firm’s compliance with the requirements of the Duty. Reports should also enable the board/governance body to identify where good/intended outcomes are not being achieved, allowing it to act to address any harm (or potential harm) being caused to consumers. Evidently, thorough, in-depth MI is key to developing an annual board report that will serve sufficient purpose for the board/governing body to meet its requirement to assess compliance and address harm. Many will have made sufficient progress in the data and MI they have collated over the course of their implementation journey, but firms should now be thinking about compiling the collective MI aspects into a board report fit for purpose. Remember, annual board reports and any actions on the back of each annual report need to be documented and retained for evidence. The FCA has previously stated that such evidence should be readily available, if the regulator feels the need to request it.

What’s happening with motor finance commissions?

Published 01 February 2024

The issue of disclosure commission complaints is something we have been following in recent times as part of our work on motor finance. On the 11th January the Financial Conduct Authority (FCA) announced that it would be undertaking work in the motor finance market – but on a different area- discretionary commission arrangements. The regulator banned these arrangements in 2021 but it was starting to see a high number of complaints from customers to motor finance firms, claiming compensation for commission arrangements prior to the ban. The FCA found that many of these complaints were being rejected because firms do not think they acted unfairly. As a result, the regulator is using its powers under s166 of the Financial Services and Markets Act 2000, to review historical motor finance commission arrangements and sales across several firms. They have told us in the interest of time they will appoint the skilled person to carry out the review. Firms that are part of the s166 project should have been contacted by now. There is likely to be a wider sample of firms that are contacted for some details as the FCA is keen to understand what has happened across the entire sector. The FCA should be in touch with these firms before the end of April. While the FCA carries out its investigation it has also paused the 8-week deadline for motor finance firms to provide a final response to relevant customer complaints. The pause will last until late September. Firms need to alter their processes to ensure the pause is in place and that complainants know what is happening. That includes ensuring all communication about the new deadlines and time limits is clear. There is some useful information for firms on the FCA website. The investigation is in its early stages, but possible outcomes may include customer redress schemes as well as new guidance for the sector. The FCA has asked firms to save relevant information in case of future complaints or redress schemes. The Financial Ombudsman Service also recently investigated some complaints that had been rejected by firms. It found in favour of the complainants in two recent decisions which can be viewed here and here. It’s worth firms taking the time to read these to get a sense of the approach the Ombudsman is likely to take in the future. There is no doubt that they will be involved in the project. It’s clear that there is a lot going on in the motor finance sector and there will be some uncertainty until we see the results of the FCA’s investigation. Experience from other sectors tells us the firms should make sure they are communicating with affected customers by explaining the current changes. Though much of the investigation will relate to historic cases, firms should be focusing on doing the right thing for their customers, particularly against the backdrop of the Consumer Duty. We will continue to engage with the FCA while the investigation is ongoing. If you have …

Changes in Home Credit

Published 22 January 2024

Back in the early noughties, the home credit market was under intense scrutiny for a lack of competition which led to the then Competition Commission investigating the sector. It was thought that it was difficult for consumers to compare products or switch between providers to find the best price. Following the investigation an order was passed that placed various conditions on the sector. Fast forward to last week and we were pleased to hear that the Competition and Markets Authority, the successor to the Competition Commission, has suspended parts of the original home credit order and published an invitation to comment on a proposed review of the order. For some there may be no surprise that just one of the six original larger lenders active in the market remains today. We have seen the home credit market drop away under regulatory pressure and the activities of claims management companies driving complaints. Independent research suggests this might be as much as a 90% reduction. That generates questions and concerns about what happens when regulated credit is stripped away. There is growing evidence that this has led to the growth of illegal lending throughout the UK. Unfortunately, this more significant issue is not getting the focus it deserves. We continue to raise these concerns with both the FCA and HM Treasury. One of the drivers of the original inquiry was down to home credit customers having a lack of other borrowing options. This problem hasn’t gone away. Recent customers will face the same challenges. Many are likely to have turned to family and friends or loan sharks. And we know the lines between these two groups can become blurred quickly. This review covers the “Lenders Compared” price comparison website set up following the order. All lenders were required to list their products on the site, which was to be funded by the larger firms within the market. As larger firms like Provident, Non-Standard Finance and Morses Club have left the market, this is now unsustainable. There is also a question as to whether a price comparison site remains useful to consumers in this area of credit. There is likely to be more relevant information and advice that could be shared with these individuals. We all want consumers to be given clear information about their options for borrowing and the cost of loans, but there has been immense regulatory change in recent years. Regulation now sits with the FCA and lenders in this sector must comply. The introduction of the Consumer Duty is also redefining how firms and their customers interact. The market has changed dramatically since 2007, and parts of the order no longer make sense. The CCTA will call for the review to go ahead and question whether parts of the order need to be updated, given the current state of the market, nearly 20 years on. We will constantly push for more focus on the more significant access to credit questions. As always, if you have views to share, then …

A look ahead at 2024

Published 09 January 2024

2023 was a busy year for the consumer credit sector and the CCTA. It saw the introduction of the FCA’s Consumer Duty, new research into the impact of illegal lending and further engagement with our key stakeholders- the FCA, the FOS and HM Treasury on a range of issues. Here we explore some of the developments we expect in 2024. Proposed changes at the FOS The FOS and its current consultation on their plans and budget will be one of our first priorities for the year at the CCTA. These proposals suggest a reduction in the case fee and levy which would be a welcome change for the sector. The FOS is also seeking views on whether Claims Management Companies should pay a case fee for accessing the FOS system. This is a proposal that we have pushed for in recent times. That one side of a disagreement should carry all the costs in a fight between two commercial organisations is unjust. It also allows for bad behaviour and poor quality complaints without consequences. That is why we will be pushing the Ombudsman to go ahead with the proposals. Will BNPL regulation finally arrive? Regulation of the Buy-now Pay-later (BMPL) sector has been expected for some time. We know that regulation is on the way. With the reported use of BNPL now so high it means that this must be inevitable. The unknowns are going to be the type of regulation and the timing. Last summer the Government suggested that BNPL might receive lighter regulation. That did not go down with consumers or other lenders wanting a level playing field. Reform of the Consumer Credit Act The long-awaited review of the Consumer Credit Act (CCA) is also expected. It is likely that parts of the Act will now become part of the FCA Handbook to be more flexible moving forward. We will be working on behalf of members to simplify some of the outdated parts of the Act for firms and consumers alike.  There will be an election…at some point We also know a General Election is coming this year. Sunak is hinting that it will likely be in the latter half of 2024. We will be engaging with politicians across the political spectrum ahead of the election, including Labour’s shadow Treasury team to brief them on the sector. It is crucial that any new government – Conservative, Labour or some coalition – understands the importance of credit for UK families and businesses. The Consumer Duty isn’t done July 2023 was the implementation deadline for the Consumer Duty, but that was just the start. The next steps for the coming year are likely to focus on governance and Management Information. It will be about how you are evidencing that you are doing the right thing for the consumer. The regulator is likely to explore several issues through the prism of the Duty. We have already seen this with value for money around bank savings rates and investment fees. A likely …

Borrowing and spending at Christmas

Published 15 December 2023

At this time of year, there are always stories about how people plan to pay for Christmas. Costs can quickly add up between presents, family expectations, extra travel, and hosting. Combined with the cost-of-living crisis currently facing many, it can be an expensive time of year. This year, different organisations have researched to explore our Christmas spending. New data from the Money and Pensions Service (MaPS) shows that one in four (26%) will likely borrow or use credit for upcoming holidays like Christmas. Consumers were planning to use different methods of borrowing, with credit cards being the most popular at 52%. The FCA also polled the public about their Christmas spending plans. They found that many parents felt pressured to spend, with over a quarter (29%) of parents with young children having already borrowed or intending to do so. The regulator has said that this pressure may mean more individuals are susceptible to loan fee fraud (when a customer pays for a loan they never receive). Therefore, the FCA runs its loan-free fraud campaign, which you can learn more about here. This all raises important questions about borrowing and lending responsibly, but also access to credit. Is it right to borrow? Can the applicant afford it? Will they be tempted to look elsewhere if they cannot access regulated credit? Will they become a victim of fraud? Firstly, no one should feel pressured to spend. Taking on more borrowing than manageable is not a good idea. Lenders must ensure any borrowing is suitable as part of their lending assessment. When individuals do feel pressure, they might exhaust the options open to them. We know, for instance, that consumers of alternative credit do not have many lines of credit available. This is where the likes of the FCA’s loan free fraud campaign and the Illegal Money Lending Team’s Stop loan sharks message become more critical. It is essential that Christmas borrowing does not push people into the hands of fraudsters or loan sharks. Illegal lenders will use this time of year to prey on the vulnerable. Consumers should always use a regulated firm to borrow so they are protected if anything goes wrong. This can be checked on the FCA’s register, and if someone suspects they have been a loan shark victim, this can be reported here. This returns us to the central argument about access to credit. We know that a lot of borrowing is cyclical. People take credit to cover significant life events and pay off in the coming months. It is not uncommon to borrow for a holiday like Christmas, but it needs to be manageable and not push people into the unregulated world. We need to remember that without access, the demand remains. There needs to be a varied credit market to serve the needs of different consumers to help them manage their finances.