Gillian Guy, Chief Executive of Citizens Advice commented on the publication of the FCA’s high-cost credit review update
“The FCA’s high-cost credit review update echoes our concerns that rent-to-own companies and unarranged overdraft fees unfairly penalise vulnerable consumers.
“Credit products should help consumers manage their money and not push them into debt.
“It’s encouraging to see that the FCA is willing to intervene in the market in order to protect consumers from high-cost credit debt, and we look forward to seeing their consultation paper in Spring.
“The total cost cap on payday lending has succeeded in reducing the number of people getting into problem debt. The FCA should build on that success by extending similar protections to other types of high-cost credit.”
Background
The FCA’s figures show that more than half of the total charges paid on unarranged overdrafts were applied to just 2% of accounts, while the amount of outstanding rent-to-own debt per consumer more than doubled between 2014 and 2016, from £2,000 to £4,000.
In 2017 Citizens Advice helped more than 340,000 people with debt issues, of which 121,000 people had problems with high-cost consumer credit.
This included 30,000 people in relation to their overdrafts, 8,100 regarding hire purchase and 24,000 about catalogue and mail order purchases.
FCA publishes update on high-cost credit work