Overview

The High Cost Credit Bill aims to better protect consumers from exploitative high-cost credit agreements by giving the Financial Conduct Authority (FCA) greater powers to regulate this sector. This includes defining what constitutes "high-cost credit," setting penalties for non-compliance, and potentially capping the total cost of such agreements.

Description

This bill grants the FCA the power to define and regulate high-cost credit agreements. The FCA will create rules to prohibit specific features of these agreements (detailed in Schedule 1), such as unaffordable loan amounts, excessive default charges, and restrictive "rollover" provisions. It will also mandate certain behaviours from lenders (Schedule 2), including clear advertising, use of a regulatory database to track loans and prevent over-borrowing, and referral of struggling borrowers to debt advice services. The FCA will also have the power to levy fees on high-cost lenders to fund additional debt advice services and will annually review whether to cap the total cost of high-cost credit. Penalties for non-compliance can include making agreements unenforceable and requiring compensation for borrowers.

Government Spending

The bill doesn't directly specify government spending figures. However, it allows the FCA to levy fees on high-cost credit providers to fund enhanced debt advice services. The exact amount of additional spending will depend on the level of the levy imposed by the FCA.

Groups Affected

• High-cost credit borrowers: The bill aims to protect them from predatory lending practices by limiting the cost and features of high-cost credit agreements and providing access to debt advice.
• High-cost credit lenders: They will face increased regulatory scrutiny and potentially higher costs through the levy for debt advice and compliance with new rules. Non-compliant lenders face penalties.
• Debt advice services: They stand to benefit from increased funding and referrals under the bill.
• Financial Conduct Authority (FCA): The FCA will take on significant additional responsibilities for regulating the high-cost credit market, including establishing and maintaining a regulatory database.

Powered by nyModel