FCA publishes high cost credit review

FCA has published the findings of a review into relending by firms that offer high cost credit. It carried out the review before the current pandemic.

The results highlight concerns about poor practices by some firms and notes that around half of the relevant customers regretted borrowing more money. FCA found that debt levels increased as consumers took additional credit from high-cost lenders, and often suffered financial difficulties, stress and anxiety as a result. These customers are likely to be vulnerable and firms have a duty to act responsibly towards them.  Yet FCA found evidence some firms had suggested consumers might use additional borrowing for holidays, or suggested that relending is common and normal practice.

FCA now expects firms to review their practices in light of the report, especially to assess whether further borrowing is in the customer’s best interests or whether forbearance or debt advice would be better.

Emma Radmore