This is the message from the Finance & Leasing Association, which released figures showing that spending in March on loans, store cards and credit cards was down by 33%, 20% and 3% respectively compared with a year ago. Meanwhile, credit for car sales grew by 31%.
Against this background, the FLA has called on the Government to think very carefully before implementing its proposals to cap interest rates on credit and store cards and impose a seven-day cooling-off period on store cards. Further regulation of this kind could leave consumers with less choice from legitimate lenders and force some into the arms of loan sharks.
Fiona Hoyle, FLA head of consumer finance, said: "Lenders are already making significant changes to the way they sell credit, to comply with the EU Consumer Credit Directive and the OFT's new rules on Responsible Lending. The Government's proposal for further regulation before these changes have been implemented risks confusing customers and gold-plating the EU Directive, which already gives store card customers a 14-day right of withdrawal.
"15 million people have a store card account. Real customer benefits would be lost if a cooling-off period were introduced."
