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A credit to the nation

8 November 2012
A credit to the nation cover

Making consumer credit regulation work for vulnerable consumers in the UK

A credit to the nation? [ 150 kb]


Consumer credit is vital to the economy but it is also one of the biggest causes of issues raised with the Citizens Advice service. Over the last four quarters, Citizens Advice Bureaux in England and Wales have dealt with more than two million problems about debt, 41 per cent of which were consumer credit related. Debt problems overall represented 30 per cent of all problems.

There is great scope for consumer detriment where credit and debt is concerned, from a payday lender emptying an individual’s bank account to a family losing their home because poor advice from a debt management company meant they paid non-priority debts instead of the mortgage. Issues with consumer credit can also have a significant impact on consumers’ health – with increased stress causing both physical and mental health issues – and family life.

The regulatory structure for financial services is changing and responsibility for consumer credit regulation is moving to the new Financial Conduct Authority (FCA). This is an ideal opportunity to give consumers more protection from unscrupulous companies and highly questionable practices which cause significant detriment.

Developing a new regulatory regime for consumer credit – one that is firmly focused on consumers – raises a number of important questions for consideration:

  • What do consumers need from an effective regulatory regime?
  • Which elements of the current regime should be retained?
  • How will the regulator need to adapt its approach to be able to deal with the consumer credit market?
  • What outcomes do we want to see?

Evidence from the Citizens Advice service shows the nature and scale of the issues consumers experience now and these issues should be used to help shape a stronger more effective regime for the future.