The regulator has refused authorisation to 40 consumer credit firms while 100 debt management firms left the industry rather than complying with stricter requirements.
The Financial Conduct Authority has driven out 1,400 consumer credit firms since it took control of consumer credit on 1 April 2014.
The regulator has refused authorisation to 40 consumer credit firms while 100 debt management firms left the industry rather than complying with stricter requirements.
Tracey McDermott, acting chief executive of the FCA, who was speaking at the Credit Summit 2016 in London, said: “We have, together, made significant progress in driving up standards in the sector. There is much still to do but, from our perspective, consumer credit regulation is now firmly embedded as a key part of what we do at the FCA.
“I am not confident that we can yet say we have seen the end of the poor practices that have tarnished the industry. But we are determined to drive up standards and, encouragingly, we are seeing businesses begin to make the necessary changes to meet the requirements of the new world.”
On 1 April 50,000 firms transferred with interim permissions from the Office of Fair Trading to the FCA. Since then the FCA has granted authorisation to 30,000 firms, including 8,000 that were new to the consumer credit market.
Payday lending firms have been hit hard by the regulator. In the last three years the number of loans issued by payday firms fell from 6.3 million in the first half of 2013 to 4.2 million in the same period of 2015 and 1.8 million last year. Citizens Advice saw fewer clients in trouble over the same period.
McDermott added: “Not everyone has been able or willing to adapt their practices. I think everyone in this room is aware that we’ve also seen certain types of firms exit the industry since the FCA took over consumer credit regulation.
“We are content to see firms leave the industry if they cannot meet these standards. And we think you should want that too. You should be competing on a level playing field where your peers don’t gain advantages by cutting corners or exploiting customers.”
She requested feedback on whether the Consumer Credit Act is fit for purpose or overly burdensome, while in the next year she said the regulator will focus on advice, culture and governance, technology and innovation, treatment of existing customers and financial crime
McDermott said: “We need to take a long-term view to anticipate and prevent the problems of the future.
“But how do we achieve this? I have been around long enough to see the cycle of ‘regulate, de-regulate, repeat’, the seemingly perpetual swinging of the pendulum.
“But, odd though it may sound coming from a regulator, it is not enough to make and enforce rules, behaviour will only change permanently for the good if it is self-reinforced.
“I hope you’ll agree that any short term pain is well worth the long term gain to have a sector that is trusted, respected and admired.”
