Brian Corr, Interim Director of Retail Lending at FCA delivered a speech on 23 March 2022 to the Credit Summit addressing the impact credit will have on consumers as the economic situation continues to deteriorate and the role FCA intends to play in ensuring this impact is a positive one.
He began by outlining the increased financial pressures affecting consumers, including the impact of rising gas and electricity prices, rents, interest rates, inflation and national insurance. He then stated that FCA expects to see increasing demand for credit in conjunction with a reduction in affordability for many consumers. Credit markets need to be innovative, competitive, and designed to deliver the right outcomes for consumers in order to combat these pressures.
The main focus of the speech was to explain how the purpose of the Consumer Duty is to promote this level of adaptability by encouraging firms to focus on positive outcomes for consumers rather than narrow or technical compliance. FCA intends to publish a policy statement and any new rules on the Consumer Duty by the end of July but expects firms to be acting already to ensure they have the right mindset, culture and data in place in to ensure they understand their customers and the effect that the firms’ products and services have on them.
FCA intends to continue its focus (developed throughout the course of the Covid-19 pandemic) on ensuring that borrowers get the right help from lenders when they get into financial difficulty. FCA wants firms to be better at recognising the signs of vulnerability and to respond appropriately to consumers specific needs.
It also acknowledged the impact that FCA’s focus on high-cost short-term credit has had on reducing the size of this sector and therefore access for those for whom more mainstream credit is not an option. However, FCA has no intention of lowering the standards it expects from firms and is instead looking to work collaboratively with the Government, commercial lenders and others to ensure there are a range of options open to those looking to manage short-term income shortfalls.