FCA to scrutinise rent-to-own in high cost credit review

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The Financial Conduct Authority is looking for feedback on high cost credit activity, including rent-to-own.

The regulator has today put out a call for input on the topic.

The FCA says that since taking over the regulation of consumer credit in April 2014, the FCA has focused on products that it thinks pose the biggest risks to consumers.

An FCA statement says: “One area of focus has been high-cost credit, which includes payday loans, home-collected credit, catalogue credit, some rent-to-own, pawn-broking, guarantor and logbook loans.

“Other credit products – such as motor finance, credit cards, overdrafts and some instalment lending – may be high-cost, particularly for less creditworthy customers or depending on how they are used.”

FCA chief executive Andrew Bailey says: “This is a significant moment for our approach to consumer credit regulation as we continue to ensure that this market works well for consumers.

“As an organisation, we have already taken many steps to address the risk of consumer harm by putting in place new rules for high-cost short-term credit firms and taking action against non-compliance across all credit markets.

“We have come up to the point of reviewing the cap on payday lending, making now the right time to take a broader view of the issues around high-cost credit, including unarranged overdrafts, and to consider whether our requirements remain appropriate.”