On 23 March 2022, the FCA published a speech by Brian Corr (Interim Director of Retail Lending, FCA) entitled ‘Supporting consumers through tough times – priorities for credit regulation’.

In his speech Mr Corr discusses the outcomes the FCA would like to see from consumer credit and what it’s doing to help deliver those, how it is adapting its approach in the new economic environment, and how it wants to work with firms to be ready to help people through the challenges ahead.

Key points in the speech include:

• Low levels of resilience and rising costs are a potent combination that could cause serious financial problems for millions of people – and that could have significant implications across the credit sector.
• In October last year, about a third of people surveyed by YouGov thought their financial situation would get worse over the next year; by January this year, more than half did.
• The FCA expects to see higher demand for credit, but the rising cost of providing and obtaining credit is likely to make it less affordable for some. People who want to borrow or have already done so will in many cases find it harder to pay off their debts.
• Credit matters greatly for consumers so firms need to be cautious and diligent, focused on their customers’ needs, and ready to respond as those needs change. The FCA wants firms to make the same shift as the FCA – focusing ever more closely on delivering the right outcomes for their customers.
• The FCA has now consulted twice on its proposals for a new consumer duty and expects to have a policy statement and any new rules in place by the end of July, only four months from now.
• Firms don’t need to wait for the FCA to give detailed rules on the new consumer duty – they can get a head-start now by making sure they have the right mindset, culture and data in place, and looking for gaps between where they are now and where they will need to be. They should also be thinking about how the new duty impacts existing products and any new products that are being designed.
• The FCA is currently running a comprehensive programme on how borrowers in financial difficulty are treated so that it can ensure those who need help are getting it. This covers lending products across and beyond consumer credit, including firm surveys, in-depth discussions with firms and consumer research.
• The FCA has seen nothing to indicate that the Financial Ombudsman Service’  approach to assessing affordability complaints, including loans involving relending, is out of line with its own expectations. The FCA’s own experience is that firms have too often failed to meet its expectations on affordability, including relending. The FCA sees no case for lowering affordability standards on the basis that it believes that it won’t help consumers by making it easier for firms to lend them money that they can’t pay back.