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FCA dear CEO letter on Strategy for Consumer Lending


In March, the FCA issued a Portfolio Letter for Consumer Lending Firms

Notably, this letter marks the first time the FCA has simultaneously addressed three topics [portfolios], as it addresses.

  • High-Cost Lending,
  • Mainstream Consumer Credit, and
  • Credit Union Firms in one go.

The rationale for merging these topics is based on the shared characteristics in products, customer demographics, and associated risks.

The FCA says.

The FCA’s letter also highlights the following core messages:

  • A well-functioning market depends on firms “lending affordably and sustainably, mitigating the risk of poor consumer outcomes, and providing appropriate assistance to consumers facing financial hardship.
  • A predominant theme of heightened customer vulnerability and decreased financial resilience, something that should be a priority to address for all Firms. Particularly considering the anticipated thematic review on vulnerability that is due this year.

Whilst a specific communication for Motor Finance, Retail Finance, and Mortgage providers will be forthcoming, all Firms must read this letter [FCA expectation] and evidence the actions taken in response.

Source letter


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