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FCA launches call for input on high price credit and overdrafts

FCA launches call for input on high price credit and overdrafts

The Financial Conduct Authority (FCA) has now established that it’s searching for evidence and feedback to further inform its work with high-cost credit, including overview of the pay day loan price limit.

Since overpowering legislation of credit in 2014, the FCA has focused on products that it believes pose the highest risks to its consumer protection objective april. One section of focus was credit that is high-cost including pay day loans, home-collected credit, catalogue credit, some rent-to-own, pawn-broking, guarantor and logbook loans. Other credit products – such as for instance engine finance, bank cards, overdrafts plus some instalment lending – can be high-cost, specially at a lower price creditworthy clients or dependent on the way they are employed.

High-cost items – The FCA can look across all high-cost services and products to create a complete image of just how they are utilized, if they result detriment and, if that’s the case, to which customers. This may allow the FCA to think about whether further policy interventions are required.

Overdrafts – The Competition and areas Authority (CMA) identified a true quantity of competition problems with overdrafts, such as bad cost transparency therefore the nature and amount of costs, particularly for unarranged overdrafts. The FCA can look in detail at overdrafts from a customer security, along with a competition, viewpoint which consists of complete variety of abilities.

The high-cost short-term credit (cash advance) cost cap – the purchase price limit arrived into force on 2 January 2015. The FCA invested in reviewing the limit couple of years following its execution, within the very first half 2017.