OFT publishes review of high-cost credit

[Legal Beagles]

The OFT has published the final report of its review of the £7.5 billion high-cost credit sector.

More...

[bernslai]

Re: OFT publishes review of high-cost credit

Well that was worthwhile then...

[Amethyst]

Re: OFT publishes review of high-cost credit

Ray Watson, OFT Director of the Credit Group said:

'Our report has found that people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal. This means that competition between suppliers is less effective than it might be. The recommendations we're making today would deliver worthwhile improvements to these markets but more radical approaches, outside the remit of the OFT, need to be examined by the Government if the fundamental and longstanding issues of lack of consumer power and limited supply are to be tackled.'

The high-cost credit review (pdf 451kb) has been submitted to the Minister for Consumer Affairs at the Department for Business, Innovation and Skills.



4.5 Tackling these concerns would require fundamental changes in
approach. In theory, these might include actions by the Government –
and potentially others – to:
• secure a step-change in financial capability in a group of the
population that, typically, has lower than average final educational
achievement, through, for example, a large scale education
initiative
• effect a cultural change in society's and individual consumers'
approach to credit
OFT1232 | 45
• either subsidising or requiring mainstream financial suppliers to
offer loans in these markets that meet consumers' needs at
reasonable prices, and
• a substantial increase in the direct provision of credit to consumers
in these markets through, for example, a much expanded version of
the Government's Social Fund.

great plan,,,,errrm didnt labour shelve their idea of extending social fund loans because they were criticised over the planned charging of interest for budgeting loans (as opposed to crisis loans) Personally I'd love to see budgeting, crisis and social fund loans extended to low income families as well as those on limited specific benefits...even with a low interest burden on them.

Not massively effectual recommendations are they.

[EXC]

Re: OFT publishes review of high-cost credit

The problem with the OFT is that it is principally a competition authority and is not a regulator as such and therefore it instinctively looks to address consumer issues from a competition perspective in a particular market.

http://www.oft.gov.uk/shared_oft/rep...ons/oft907.pdf

Part 1: OFT role and performance
5. The OFT's mission is to make markets work well for consumers, and we have a broad remit and a diverse set of tools available to help us achieve this. We are not a regulator in the strictest sense; indeed our direct regulatory powers are limited

The real problem is that the financial services industry does not have a dedicated regulator.