New consumer credit campaign

Michelle SmythPresentation to BEUC General

Assembly November 2013

Consumer credit it the UK

Which? Is concerned about the unfair balance of power between lenders and borrowers.

Many lenders do not give customers clear information, treat them fairly if they are in financial difficulty or lend responsibly only to people who can afford to pay back the loan.

As the cost of living continues to rise in the UK, we’ve found that more people are using credit just to get by:•Half (48%) of UK adults are worried about their level of household debt•Nearly a quarter (23%) borrowed money last month to pay for essentials

Which?’s Clean Up Credit CampaignThe Financial Conduct Authority (FCA) will gain responsibility for regulating consumer credit from April 2014 and is currently consulting on how it will regulate the market.

Which? launched the Clean up Credit campaign to keep the pressure up on the FCA to take the steps needed to clean up the market and make lending work for consumers. We asked consumers to share their experiences of using credit with us on our campaigns website.

We want the FCA to:Ban excessive default fees and chargesEnsure that lenders provide clear and transparent informationCrack down on irresponsible lendingPut people in control of their creditEnsure lenders provide swift, early and effective intervention for people in

financial difficulty.

www.which.co.uk/cleanupcredit

Payday loansPayday loan companies (such as Wonga) have gained a lot of public criticism in the UK for being an expensive way to borrow money.

We’ve worked with a cross-party group of MPs, consumer groups and debt charities to develop the ‘Charter to Stop the Payday Loan Rip-off’, a set of principles that we all agree are needed to help regulate the market.

OverdraftsWhile a lot of the attention in the UK has been on the payday loan companies, Which? wants the FCA to take steps to clean up the whole credit market and not just focus on payday loans.

In particular, Which? is concerned about overdrafts. We published research showing that authorised overdrafts can be just as expensive as payday loans, and that unauthorised overdrafts can be much higher – up to £100 in interest and fees for borrowing £100 for a month.

We want the FCA to tackle high default fees for unauthorised overdrafts and also to ensure banks display the cost of overdrafts clearly and in a way that will allow consumers to easily compare costs between different providers.