CCTA comment on new report from Fair4All Finance
Commentary | 23/05/24
Commenting on Fair4All Finance’s new report “Access to credit & illegal lending”, the CCTA said:
We welcome the publication of today’s report, which outlines the current state of access to credit for many and the impact of illegal lending. They are right to point out that the shape of the market is as important as its size.
They are also right to say that the UK credit market is not functioning properly for lower income households, many of whom have lost access to credit.
We have been trying to draw attention to these issues for some time, having seen the major contraction[1] in the alternative lending sector. This has pushed people to less desirable options.
There needs to be more support for tackling illegal money lending, especially as criminals look to use digital channels to exploit more victims. There is also a need to increase legal options.
For that reason, it is good to see that the report states that a refreshed high-cost credit market can provide access for some consumers. There is also recognition that community finance alone cannot fill the gap left by commercial lenders. The market needs a range of small and specialist lenders to meet demand and provide competition.
One of the report recommendations is about the need for regulatory adjustments to improve the market. Fair4All Finance is calling for a rebalancing between customer protection and the need to provide access to credit.
The regulator and industry must discuss how to achieve this to ensure access to legal, regulated credit for those who need it the most.
[1] From being 4% of the outstanding consumer credit loans market in 2013, forms of legal, high cost credit reduced to under 0.3% by 2023 (Fair4All Finance). Industry estimates that this is a fall of about £3 billion.