AI versus human expertise
Why authentic content wins in consumer credit

Published 17 April 2025

The digital space is where consumer credit providers win or lose. In the race to optimise websites, many turn to AI-powered content tools. These promise quick SEO gains and effortless content creation, but relying solely on AI can be a costly mistake. Here’s why human expertise remains crucial for building trust and engagement.   The AI paradox: Inauthenticity and disconnection AI lacks the human touch needed to convey trust and authenticity. It often produces generic, robotic content that fails to resonate with consumers seeking financial guidance. For instance, an AI-generated line like “We offer flexible loan options for everyone!” lacks the empathy that reassures customers facing financial decisions. User experience: AI’s content pitfalls Search engines like Google prioritise user experience, and poorly structured, grammatically challenged AI content creates a frustrating experience. Imagine a financing page riddled with nonsensical sentences. Confused customers will likely leave the page, miss valuable information and hinder your conversion rates. High bounce rates and low engagements also send negative signals to search engines, potentially burying your website in the digital abyss. SEO risks: AI and duplicate content AI rewriting tools can inadvertently create duplicate content – a cardinal sin in the eyes of search engines like Google. Copied content is seen as a manipulative attempt to climb the search rankings, leading to penalties that push your website down the page or worse – delisting it entirely. The sophisticated algorithms of Google are adept at detecting unoriginal content, and the consequences of using AI to rewrite can hurt your dealership’s online visibility and credibility. Why human expertise matters in SEO Effective SEO is an intricate dance involving keyword research, schema markup, and understanding user intent. AI simply doesn’t have the finesse needed to strategically place keywords or leverage voice search optimisation. Without human expertise, your dealership’s website might miss out on crucial search terms related to your specific inventory or services. Imagine wanting to rank highly for “finance lender near me”, but your AI-generated content misses this local search intent. The human advantage: Building trust and driving conversions Consumer credit decisions are deeply personal, requiring clear and empathetic communication. Human content creators craft engaging, tailored copy that addresses concerns and offers solutions. Explaining complex financial terms in a conversational, reassuring tone fosters trust and encourages customer action. Conclusion: AI can assist, but humans win AI can support content creation, but human expertise is irreplaceable. Consumer credit providers must prioritise authenticity, clarity, and trust to stand out, rank well, and connect meaningfully with their audience.

A growing threat
Fraud: A danger to the credit industry, customers and communities

Published 17 April 2025

Fraud is more widespread than ever, causing significant harm to businesses, individuals, and communities. It erodes trust in the digital economy, hampers economic growth, and destabilises vulnerable economies worldwide. As criminals adapt and evolve, the impact extends far beyond financial losses, threatening the integrity of financial systems and consumer confidence. The cost of fraud to the UK economy is staggering, estimated at £219 billion annually. These stolen funds fuel other forms of crime, creating a ripple effect of harm. In 2024 alone, a total of £11.4 billion was stolen from consumers. The number of fraud filings to the Cifas National Fraud Database (NFD) also reached an all-time high, with over 420,000 cases recorded to the NFD last year – a 13% rise compared to 2023. The rapid advance of technology is supercharging the reach and capabilities of criminals. AI is revolutionising the way they operate, enabling them to harvest data at scale, generate near-flawless fake documents within seconds, and execute attacks on networks with unprecedented efficiency. The use of deepfakes and AI-generated voices has made impersonation fraud more convincing than ever, allowing criminals to pose as consumers, business leaders, and authority figures to steal sensitive data and life savings. As a result, fraud is not only harder to detect but also more pressing and urgent than ever before. From our most recent data, Cifas members recorded a fraud-risk case to the NFD every two minutes, and together we prevented over £2.1 billion in fraud losses in 2024. Here is what our latest insight tells us. AI is amplifying identity fraud Identity fraud is the dominant fraud type recorded to the NFD. This has been the case for many years. Criminals rely on well-established impersonation tactics, luring victims into fraudulent transactions through scam calls promising fake handset upgrades and discounts. Those aged 61 are the most targeted demographic highlighting a need for increased education and protective measures to safeguard these consumers. Account takeovers are a concerning trend Facility (account) takeovers surged in 2024. Mobile phone accounts were the primary target as online retail platforms remained a hotspot, with criminals frequently altering account details or redirecting deliveries to fraudulent addresses. False applications are not slowing down False applications increased by 10% in 2024. AI-driven fraud is also playing a critical role in this trend. Criminals are using sophisticated generative technologies to create high-quality fake documents that can evade traditional verification checks. Money muling remains a threat Individuals under thirty years old accounted for 61% of money mule cases, reinforcing the need for continued education and proactive prevention strategies to deter young people from being recruited into illicit financial schemes. Insider threats are a hidden danger Employees who misuse their access to company systems remain a critical risk according to filings to the Cifas Insider Threat Database, often exploiting their knowledge of internal security measures to evade detection. The need for vigilance and collaboration Our latest fraud-risk data serves as a stark warning: fraud is evolving at an unprecedented pace, and no sector …

Cultivating relationships
Introducing your new membership manager

CCTA

Published 17 April 2025

I’m delighted to introduce myself as the new Membership Manager at the Consumer Credit Trade Association (CCTA). It’s an exciting time to join the organisation, and I’m eager to connect with all of you – our valued members – to ensure that you receive the best possible support, insights, and services that CCTA has to offer. With a strong background in membership engagement and support, I am passionate about building relationships, understanding the challenges our members face, and providing solutions that help your businesses thrive. The credit industry continues to evolve rapidly, and my role is to ensure that you, our members, are well-equipped with the guidance, resources, and representation needed to navigate these changes confidently. My focus areas Since stepping into this role, I have focused on three key areas: member engagement, enhancing CCTA’s services, and contributing to strengthening our industry voice. These priorities align with our mission to provide uncompromising practical help to businesses offering credit to consumers. 1. Stengthening member engagement At CCTA, our members are at the heart of everything we do. One of my top priorities is to ensure that every member feels heard, supported, and fully aware of the benefits available to them. Whether you’re a long-standing member or have recently joined, I want to make sure you receive personalised support and valuable insights from us. To achieve this, I’ll be focusing on: Building stronger communication channels so you can reach us easily and receive timely updates. Listening to your needs through direct conversations, surveys, and networking events to ensure we tailor our services accordingly. Encouraging active participation in our events, discussions, and policy initiatives so that your voice helps shape the future of our industry. Expect to hear from me regularly as I work on making membership engagement more interactive, accessible, and beneficial for you. 2. Enhancing member services CCTA already offers an extensive range of events, agreements, statutory documents, online advice, and industry updates, but I want to ensure that these services remain relevant, practical, and easy to access. I will be working closely with our team to: Expand our event offerings so we cover the most pressing topics in the industry, from regulatory updates to best practices in consumer credit. Improve access to documents and agreements, ensuring you always have the most up-to-date legal resources at your fingertips. Enhance our online advice and news updates so that you can stay ahead of industry changes without having to search for information yourself. Your feedback will be crucial in helping us refine these services, so please don’t hesitate to share your thoughts on what you need most from CCTA. 3. Stengthening our industry voice One of CCTA’s greatest strengths is its ability to work constructively with policymakers, regulators, and the government to advocate for the interests of our members. I will be contributing to this effort by ensuring that members stay informed about industry developments and have opportunities to engage in discussions that shape the future of consumer credit. How I can help …

The rise of alternative data in consumer lending
Enabling financial inclusion and catalysing growth

Published 17 April 2025

The landscape of consumer lending is undergoing a significant transformation. Traditionally, lenders have relied on credit scores and historical financial data to assess a borrower’s creditworthiness. However, as financial behaviours evolve and the limitations of conventional credit assessments become apparent, the role of alternative data in lending decisions is gaining prominence. Recent findings from the LexisNexis® Risk Solutions 2024 Global Consumer Lending Confidence Report reveal a notable shift in how lenders perceive and utilise alternative data. With 86% of lenders globally expressing greater confidence in using alternative credit data compared to a year ago, it’s evident that this emerging approach is not just a trend but a fundamental change in the industry. Growing confidence in alternative data In the UK, the adoption of alternative data has seen a remarkable uptick. 84% of lenders reported increased confidence in making consumer lending decisions based on non-traditional data sources. This shift underscores a growing awareness that past credit interactions do not always provide a complete picture of a borrower’s financial behaviour. One common misconception about using more data in lending decisions is that it leads to higher rejection rates. However, there is growing evidence that alternative data actually helps identify lower risk consumers who may have been overlooked by traditional credit assessments. As a result, lenders can approve more applicants and offer them better terms, fostering financial inclusion and driving business growth whilst maintaining a robust risk policy. Challenges with traditional credit data While confidence in alternative data is increasing, reliance on traditional credit data is waning. The report highlights that 59% of lenders feel less confident in making lending decisions based solely on traditional credit scores. A key reason for this is the coverage gap – 91% of lenders reported that traditional data alone does not provide a full evaluation of at least a quarter of applicants. This is a significant concern, as it means a substantial portion of potential borrowers may be either misclassified or excluded from credit opportunities altogether. Another major drawback of traditional credit data is its latency. In the UK, repayment data used in conventional credit models can be up to two months out of date. This delay can lead to inaccurate assessments of a borrower’s financial situation, potentially resulting in unfair declines, mispriced loans or missed lending opportunities. Alternative data, on the other hand, offers more real-time insights, allowing for fairer and more reliable credit decisions. Economic challenges and smarter lending The UK’s ongoing cost-of-living crisis has amplified the need for more flexible and inclusive lending solutions. Consumers are increasingly turning to credit products, including credit cards and Buy-now, Pay-later (BNPL) schemes, to manage their expenses and purchases. While these options can be beneficial when used responsibly, excessive reliance on credit, particularly in the face of rising interest rates, can lead to financial difficulties. The report indicates that 43% of respondents have observed an increase in loan delinquencies over the past year. Consequently, 95% of lenders anticipate that loan collections will be a major challenge in the …

Supporting vulnerable customers
FCA review highlights

Published 17 April 2025

I wanted to use this edition of our magazine to talk about the FCA’s recent vulnerability review and publications. On 7 March, the FCA published their findings into a review of firms’ treatment of customers in vulnerable circumstances, including their consumer research and examples of good and poor practices. It is clear that vulnerable customers remain a top priority for the regulator, and rightly so. They should be a priority for firms too. The FCA was generally happy that, overall, progress has been made by firms to deliver better treatment to customers in vulnerable circumstances. However, more is needed – and the review highlights important areas where firms can go further. One key message for firms is the link between the identification and disclosure of vulnerability and the level of trust customers place in financial services providers. The consumer research commissioned by the FCA found that around four in ten customers do not disclose their vulnerabilities due to discomfort, mistrust, or fear of worse outcomes. On the other hand, of those who did disclose, around 60% felt the firm reacted positively and made appropriate adjustments. When disclosure happens, customers feel more supported – helping to build trust in firms. Many firms have strong reactive practices in place to support customers who disclose characteristics of vulnerability. But what about proactive steps? Is your firm actively encouraging disclosure? This is an area where many firms can benefit from reflection and development. Another key message from the review is the need for good quality data and meaningful Management Information (MI). The more detailed your data throughout the customer journey and product lifecycle, the more powerful your MI becomes. Can your MI show where good outcomes are being achieved – or highlight where things are going wrong? If not, it may not be granular enough. The FCA identified firms that were not spotting or acting on poor outcomes due to inadequate data. The review also highlighted insights around customer communication. While some firms have made good progress in providing clear and timely communications to vulnerable customers, many others could do more to provide accessible channels and improve customer understanding. It’s important that members regularly review their communications – ensuring they’re as clear and accessible as possible – and that these are properly tested. Similarly, firms should review their channels to ensure they don’t create unnecessary barriers for vulnerable customers trying to seek support. One final – and important – message from the FCA is the need for targeted, tailored training that supports teams across the business in identifying and assisting customers in vulnerable circumstances. The review found that training at the product design and development stage needs improvement. Vulnerability should be considered whenever new or amended products and services are introduced. The FCA is clear: they expect more training for design and development teams – not just those on the front line. We will shortly be issuing a guidance paper with full insights into the FCA’s vulnerability work, along with practical direction on areas …

A long road ahead
Actions motor finance firms can take following the Supreme Court ruling

Published 17 April 2025

The FCA’s review into discretionary commission arrangements, together with the outcome of the Supreme Court’s review of a landmark Court of Appeal ruling regarding motor finance commissions could have widespread consequences for the motor finance sector. In January 2024, the Financial Conduct Authority (FCA) launched a review into historical motor finance discretionary commission arrangements (DCAs) which were banned in 2021 to determine whether there has been ‘widespread misconduct’. In a significant development in October 2024, the Court of Appeal ruled in favour of consumers in relation to three motor finance commission claims, stating that DCAs were unlawful unless they had been disclosed to the consumer, and that they had given informed consent to the payment. While this ruling goes beyond the scope of the FCA’s review into historical use of DCAs by motor finance firms, it has raised further concerns for the sector and the possibility of widespread liability where commissions were not properly disclosed. In response to the Court of Appeal’s ruling, the lenders involved appealed to the Supreme Court and these cases were heard over several days in early April. Given the potential impact of the outcome, the Supreme Court is expected to hand down a decision in an expedited timeframe. The FCA also recently announced that it will confirm within six weeks of the Supreme Court handing down a decision whether they will be proposing a redress scheme and how it would be taken forward. The FCA has indicated that if, considering the Supreme Court’s decision, they conclude motor finance consumers have lost out from widespread failings by firms, then it is likely they will consult on an industry-wide redress scheme. In the meantime, complaints relating to motor finance are expected to remain high, noting FCA rules mean motor finance firms have until after 4 December 2025 to respond to both DCA and non-DCA motor finance complaints. The viability of motor finance operating models While the decision of the Supreme Court and the FCA’s announcement are eagerly awaited, firms may be grappling with some of the following strategic and operational issues: The ongoing use of commission models and how this may impact broker engagement, deal flow and loan origination The impact of an increase in operational and compliance costs driven by complaint volumes, processing of data subject access requests (DSARs) and enhanced disclosure requirements The repercussions of any possible remediation exercise and likely challenges with the implementation (e.g. data, resources, scope and quantum of compensation) How can the firm remain competitive and retain market share? How can the firm manage ongoing liquidity and  working capital requirements, including identifying cost efficiencies across the business? The FCA has previously noted its concern about the financial impact of their review on firms. In a ‘Dear CEO’ letter sent in April 2024 to motor finance firms the regulator highlighted the importance of conserving cash and maintaining adequate financial resources in light of increased commission complaints, and the associated costs for handling and resolving those complaints. Guiding fims through these challenges In …

Consumer Duty board reports
Top tips

Published 17 April 2025

Last summer we helped several clients with their Consumer Duty board reports (required under PRIN 2A.8). Since the creation of the first suite of reports, the FCA has reviewed a sample and published findings, highlighting good practices and areas for improvement. We have set out six top tips based on the FCA’s output and our own observations.   1. Less can be more “The best reports were structured in a way that made them easy for boards to scrutinise the key elements required by [PRIN 2A.8]”. Structure your report to ensure that it covers all the requirements of PRIN 2A.8.3R and facilitates capturing the review, decisions and approvals required under PRIN 2A.8.4- 5R. The report should cover customer outcomes, compliance and strategic alignment with the Duty. You also need to capture approval of the report, actions to address identified risks and/or instances of poor outcomes and any required changes to the firm’s business strategy to ensure ongoing compliance with the Duty. Start simple and build from there. Jumping straight into data can mean you get lost in the detail. Consider using R.A.G. ratings or some similar visual means of highlighting areas of elevated risk or issues. 2. Process makes perfect A clearly documented process for report production with roles, responsibilities, inputs and approvals can help manage and coordinate preparation of the report and demonstrate good governance. It also guards against key person risk if your business relies on a limited number of subject matter experts to develop the report. The FCA commented on the value of gaining input from across the business, including 2LOD and 3LOD (where appropriate). Ensure record keeping requirements are clear and do not be afraid of maintaining records of version control. 3. Prime the board and seize the quick wins Culture and conduct are a core focus of the Duty. The FCA wants to see SMFs actively leading firms by putting good customer outcomes at the heart of business decisions. Lots of firms do this but fail to capitalise on the opportunity to create an auditable paper trail. Priming your board with a documented reminder of their duties and examples of questions, then minuting discussion and (where applicable) debate in the meeting to approve the report, makes it considerably easier to demonstrate that the right behaviors are embedded. 4. Honesty remains the best policy We are in a challenging period of significant ongoing market and economic uncertainty, with a regulatory burden that has never been higher. The report is not about perfection; it is important to recognise the areas where you have gaps and set reasonable actions to address them. Actions should have clear owners, realistic timescales and – where possible – details of how success will be measured. We are in a challenging period of significant ongoing market and economic uncertainty, with a regulatory burden that has never been higher. Do not shy away from using the report to highlight successes but remember that a key objective is to show that management has its finger …

Ensuring our voices are heard
Jason Wassell discusses credit information reform

Published 17 April 2025

Over the past year, I’ve represented the Consumer Credit Trade Association on the Industry Working Group (IWG) tasked with developing proposals for a new Credit Reporting Governance Body (CRGB). It is an important and potentially far-reaching piece of work that could change the way credit data is overseen in the UK—and it’s vital that smaller and specialist lenders are not just consulted but properly considered in how the new regime is shaped. This is an example of how the CCTA seeks to speak up on behalf of our members, but also a wider constituency of lenders that have similar interests. The proposed CRGB is intended to improve transparency, consistency, and accountability in credit reporting. It would replace the current voluntary arrangements with a more formal structure, with responsibilities for setting standards, improving data quality, and overseeing credit reference agencies and data contributors. Those are laudable aims, and we agree that parts of the current system need improvement. However, we worry that the solutions are more suited for larger lenders than smaller firms. I am concerned that the FCA identifies several problems because of inconsistent data across three to four databases. However, their solution is to push for more databases and place the impetus on lenders to make the running. So, we have approached this work with a clear focus: to ensure that any new body works for all lenders, not just the largest. Smaller lenders play a vital role in the credit ecosystem, often serving consumers that others cannot, or will not borrow elsewhere. Their perspectives are essential to building a fair and inclusive credit reporting system. From the outset, the CCTA has pushed for three key things: proportionality, representation, and control of costs. I’m pleased to say that, through constructive engagement, we have seen some movement in these areas. Though I confess, I am still a little worried about how this might develop. We successfully secured an exemption for smaller lenders from the funding requirements of the new body. Under the proposals, firms below a defined turnover threshold—aligned with the definition of a small company by Companies House—would not be required to contribute financially to the CRGB. That’s a win, and it ensures that new obligations do not inadvertently price out the smallest, most specialist firms. Second, we argued that not-for-profit lenders should not be burdened with additional costs. I know that many of our commercial members could make a case that they create value for those often underserved, but I couldn’t push that through. So, the proposals now include an exemption for not-for-profit organisations, another positive outcome for a sector that plays an essential role in financial inclusion. Third, we made the case, repeatedly and strongly, that annual fees must be controlled, and that cost should not be a barrier to participation. That included spending some time to go line by line through some of the spending assumptions to determine where we could find efficiencies. This is an important moment for credit reporting in the UK. The direction …

Trapped in a cycle of misery
The stark reality of loan shark debt

Published 17 April 2025

Loan shark debt can devastate individuals and families, affecting vulnerable members of society and leading to life-altering consequences. Behind the scenes, the England Illegal Money Lending Team (IMLT) continues to fight this criminality, ensuring illegal lenders face justice and providing essential support to victims. Research from the IMLT highlights the alarming statistics surrounding loan shark debt. The findings underscore the challenges faced by borrowers and the urgent need for support and intervention. The ongoing picture When people borrow from an illegal lender, many believe they are dealing with a friendly acquaintance. In 2024, 57% of the borrowers supported by the IMLT initially thought their lender was a friend. The primary reason for borrowing remains household expenses, with many struggling to cover rent, bills, and groceries and 50% of borrowers went without food and fuel to make repayments. A huge 91% of borrowers supported in 2024 had no savings to fall back on. Many borrowers are unaware of alternative sources of financial support. Nearly half (47%) had never heard of credit unions. Loan sharks exploit this, convincing borrowers there are no other options, leading them into a cycle of debt. The statistics show that 76% of individuals borrowed multiple times. The true cost of loan shark debt The financial burden of illegal lending in 2024 has escalated with clients borrowing higher amounts compared to previous years. While only 3% took out loans of less than £100, 71% borrowed between £300 and £10,000. The median amount borrowed stood at £6,100 – double the median of 2023. However, the cost of these loans is far more than what was originally borrowed. On average, borrowers ended up repaying £12,300 – more than twice the amount borrowed. Who is affected and how? The research reveals 100% of borrowers who applied for legal credit in the past year were declined, leaving them to seek alternative, sometimes illegal, options. Key insights include: 67% of borrowers had incomes below £20,000 10% of victims were self-employed, a higher percentage than in previous years 11% borrowed due to financial struggles linked to the COVID-19 pandemic 49% of borrowers reported mental health issues, the highest percentage recorded so far, demonstrating the devastating psychological toll Loan sharks can using social media to reach potential borrowers, which they then use to intimidate victims. Some lenders have even introduced a sexual element to their demands, with 9% of borrowers reporting that lenders suggested sexual favours when repayments were missed. Fighting back Efforts to combat loan sharks and support victims are intensifying. The Financial Conduct Authority (FCA) has taken action by applying to cancel permissions for unscrupulous lenders. Meanwhile, the IMLT, known in communities as Stop Loan Sharks, continues its national awareness-raising campaigns and activities. National Stop Loan Sharks Week is held every year (this year it runs from 19 to 25 May) and aims to highlight the dangers of illegal lending and encourage victims to seek help. Weeks of Action are held in local communities throughout the year to raise awareness, with the help …

Vishing and phising
Online, telephone and banking fraud

Published 08 April 2025

Recent figures show that the amount of money illegally defrauded by criminals via online banking fraud and telephone scams continues to rise. According to UK Finance, the number of cases of online banking fraud rose by 12% to 232,429 in 2023, with losses totalling £459.7million. How does online and telephone banking fraud occur? Phone banking fraud, commonly known as ‘phishing’ often occurs when an individual is persuaded to transfer money from one bank account to another. 1. phone banking fraud With decision systems, lenders can develop phone banking fraud: By telephone with the fraudster posing as a trusted third party and using social engineering to gain personal/financial information or attempting to convince the victim to move money (“vishing”); or 2. the fraudster intercepts and hijacks email traffic between two parties This is know as a “man in the middle attack”. The fraudster will then usually facilitate the transfer of money to its account (when the victim thinks it is paying the legitimate original email contact) or encourages the victim to log onto a fake website which then asks the victim to enter personal/financial data or places malware onto the victim’s computer (“phishing”). When the fraudster receives a sum of money, these are quickly transferred to third party beneficiary accounts and often across multiple jurisdictions. Defrauded victims need to think fast and act quickly. Practical steps to take after online or phone banking fraud Listed on the next page is our ten-step guide to practical steps, which you should take immediately on discovery of any suspect transactions: Contact your bank immediately to inform it of what has happened. Confirm the bank account number which the monies have been sent to and to request that an indemnity be issued to the beneficiary account via “Share Point”. Your bank might be able to stop the transaction from going ahead or recover funds from the fraudster’s account. Contact the beneficiary bank account where your money was sent and let it know the account number and any relevant information about the scam. Contact experienced legal representatives for urgent legal advice who can assist in freezing bank accounts via injunctive relief and trace funds through the civil courts by issuing an application(s) for a Norwich Pharmacal Order(s). Report the crime to the police through Action Fraud (0300 123 2040). Where litigation is contemplated/a possibility, it is essential that the relevant documentation is preserved and stop any electronic (and other) routine document destruction. Keep a record of any conversation/correspondence you/your employees may have had with the fraudsters whilst the details are fresh in your mind. Contact your insurer to see if you have policy cover for loss as a result of online banking fraud. If funds have been taken from a company account, undertake a thorough internal review of policy, practice and investigate any employees who may have been involved with the transfer of funds. From 7 October 2024, Payment Service Providers (PSP) (including all major banks) are required to refund frauds worth up to £85,000 under …

An unexpected turn
Court of Appeal decision on motor finance commissions

Published 08 April 2025

As we come to the end of 2025, it has certainly been a busy period in terms of activity on the regulatory horizon. Most recently, this has centred on the motor finance market. I wanted to take this opportunity to tell members about what’s happening in this sector, in particular around the subject of commissions. No doubt, most will be well aware of developments in the motor finance legal cases, but we now have another consultation on Buy-now, Pay-later products as well as a response from the Financial Ombudsman Service on their views for proceeding with proposals to charge claims management companies (CMCs). So, there is a lot to focus on before we all start to wind down for Christmas. However, I think I can comfortably say that the matter of commissions in the motor finance sector will continue to dominate well into 2025. Aspects of the Court of Appeal decision on 25 October took the industry by surprise. The fallout of that decision led to some lenders temporarily pausing further lending. Similarly, it caused a degree of uncertainty in the industry. What did the decision mean for lenders and brokers? Was the decision going to be appealed? Should industry be making changes now or wait for an appeal, if any? I know that we certainly liaised with many of our members in respect of such questions and issued insights from the wider engagement we undertook, such as from dialogue with legal professionals, other trade associations and the FCA. Our latest motor finance roundtable was also dominated by the subject of commissions. The Court’s decision led to the industry focusing on understanding what ‘fiduciary duty’ was and how this needs to be discharged. The spotlight was on understanding ‘half secret’ and ‘fully secret’ commissions and where liability would fall if the duty of the broker was not discharged. But without a doubt, the biggest shock from the Court’s decision was around informed consent. They ruled that it expected the defendants to not only disclose commission amounts and the calculation of the arrangement, but it also expected the defendants to obtain the customer’s informed consent. Up until this point, there have never been any legal or regulatory requirements to obtain a customer’s informed consent. The further concern was that this decision, therefore, does not only apply to discretionary commission arrangements, but commission arrangements in general, including fixed or flat rate commission. This was a surprise, given that even the FCA was not concerned about other types of commissions. Their current review into commission arrangements only covered discretionary commissions, and not fixed or flat rate commissions. But, when I say that the matter of commissions will continue to dominate well in 2025, we know that the defendants have lodged an appeal with the Supreme Court. This was done ahead of the 22 November deadline. The CCTA believes that an appeal was important, given the fact that the Court of Appeal decision now has wider implications on the motor finance market and brings …

An uphill climb
Advocating for access to responsible credit

Published 08 April 2025

The history of the CCTA Access to credit has always been central to the work of the CCTA since it was founded over 130 years ago. Our role has always been to provide credit for individuals that struggle to access elsewhere. One of our first members was the White Sewing Machine company. This was the biggest purchase for many homes in the 19th century. And not that much has changed, our members still help customers purchase vehicles and household appliances, but also smooth peaks and troughs in their income. We have a long-standing project to protect access to responsible credit that we often update members on. In recent months, we have seen a greater interest in access to credit and financial inclusion from a range of external stakeholders which has been encouraging. As such, I wanted to write to let you know about these developments and some of the next steps we will be undertaking. The impact of a new government Turning first to the new Labour government, we have seen an increase in their engagement on the issue of access to credit. Even prior to the announcement of the General Election, the Labour Party outlined its commitment to a National Financial Inclusion Strategy, should it gain power. This was reinforced by Tulip Siddiq MP, the Economic Secretary (Minister responsible for financial services), at the party conference which took place in September. The Secretary said that the Strategy will be designed and implemented by a committee chaired by a treasury minister with representation across government, regulators, and industry. Through writing to the Secretary, and in our regular discussions with HM Treasury officials, we have expressed our desire to play a role in the process. We believe the experience our members have of lending to those currently excluded will be vital to the development of the Strategy. Other ongoing discussions We have also continued to work in partnership with other organisations. We have collaborated with Fair4All Finance for some time and were delighted that their new CEO Kate Pender, took part in our Annual Conference. Kate talked about their desire to work with the private sector on new products, referencing the c.2 billion of estimated current unmet, but potentially commercially viable, credit quoted recently by L.E.K. Consulting. Discussions continue with members of the CCTA about potential partnerships. It is refreshing to see organisations such as this looking to work with the private sector to develop solutions. We were also lucky enough to have Chris Pond, Chair of the Financial Inclusion Commission, speak at our conference too. Unsurprisingly, they are supportive of the new Strategy promised by the government. The Commission has released new research carried out by the Centre on Household Assets and Savings Management (CHASM) at Birmingham University, which highlights the harm financial exclusion continues to cause in communities across the UK. This is a problem that needs to be addressed. The report also talks about the costs that financial exclusion causes the UK in terms of lack of productivity …