View more on these topics

Treasury consults on transferring regulation of secured loans

The Treasury has launched a consultation on transferring the regulation of consumer credit from the Office of Fair Trading to the new Consumer Protection and Markets Authority.

The Financial Secretary to the Treasury, Mark Hoban, and the Minister for Consumer Affairs, Edward Davey, have launched the consultation.

The government announced the creation of the CPMA as part of its wider reform of the financial regulatory architecture in July.

The consultation document sets out the government’s preferred option, which is to bring consumer credit into the same regulatory regime as other retail financial services under the CPMA, which would include secured loans.

The government sees this as a real opportunity to improve the way consumer credit is regulated and to create a simpler, more responsive regime.

The government believes that this option could deliver stronger protection for consumers, remove unnecessary regulatory duplication and burdens on business, and help to address anomalies that currently mean that similar products can be regulated under different regimes.

Hoban, says: “The government is already delivering on its commitment to reform financial regulation, to avoid repeating the mistakes of the recent crisis. This is an excellent opportunity to bring the OFT’s consumer credit regulation within the CPMA, creating a single regulator for retail financial services, with a single point of contact for business and consumers.

“However, we do not underestimate the magnitude and complexity of such a reform, and recognise that any new regime must be flexible and proportionate, reflecting the diverse nature of the sector.

“We are committed to ensuring that the decision on bringing consumer credit into the scope of CPMA regulation reflects the needs of consumers and businesses, and to extensive engagement and consultation on this issue.”

But Stephen Sklaroff, director general of the Finance & Leasing Association, says: “UK borrowers currently benefit from strong regulation, recently upgraded by the new Consumer Credit Directive. Transferring responsibility to the new CPMA should therefore be seen as an opportunity to create a better and simpler regime, rather than as a solution to a problem. 

“As yesterday’s market statistics showed clearly, the credit markets are currently shrinking. The government’s proposals are far reaching and could have significant potential costs. We want to work with the Government to ensure not only that any new regime is a genuine improvement, but that the transition is managed so as to minimise adverse impacts on responsible lenders and borrowers.”

Recommended

Cheap mortgage deals without proc fee could have a place in the market

Lenders may start creating cheaper mortgage products for brokers without a proc fee, the Association of Mortgage Intermediaries claims. Robert Sinclair, director of AMI, says he expects lenders to try to offer a cheaper product via brokers without proc fees in the coming years. He says: “When the market is as difficult as it is […]

Comments
  • Post a comment
  • gelboy 22nd December 2010 at 3:10 pm

    does this mean thge end of the FLA? Hope so. What is their function anyway, I find it difficult that there are ceratin companies who make loans to the consumer but are not regulated by the FSA or OFt but by the FLA. Can someone please xeplain why we the stupid public are led to believe the FSA regulates all Lenders and banks. But believe me people, that is not the case. So the sooner there is just one single regulator the better. I, for one would be glad to see the back of the FLA. If anyone at the FLA would care to explian to us exactly what it is they do I would be most grateful.Have they ever taken any form of action against one of their members who have mislead the public?