July 22 2017 Latest news:

Illegal loan sharks could be the winners

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That was the warning given to MPs by a key industry body ahead of a parliamentary debate today on consumer credit.

The private member’s bill includes provisions that the Finance & Leasing Association says could have the unintended consequence of making it harder for legitimate lenders to lend, and would lead to higher prices and less choice for many borrowers.

The FLA said that restricting rates for loans and retail credit would undermine responsible lending.

“Coming on top of all the recent new regulation, further restrictions will have the unintended consequence of forcing legitimate and responsible lenders to leave the market, or raise their prices, or both,” said Fiona Hoyle, head of consumer finance at the FLA.

“We hope MPs will instead focus on the illegal loan sharks who prey on people who are in financial difficulty.

“The real risk now is a society polarised between the credit haves and have-nots. We hope MPs will think carefully about any measures likely to make that worse.”

The FLA also said countries that operate interest rate caps had a higher proportion of “financially vulnerable” people than the UK.

The Consumer Credit (Regulation and Advice) Bill, which was introduced to the House of Commons last week by Walthamstow MP Stella Creasy, also calls for a levy to be imposed on credit and debit card providers to fund debt advice services.


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