Too Much Regulation Is Not Necessarily A Good Thing
As we have previously reported, the government have become increasingly concerned, over the course of the past few months, with the average level of personal debt on personal loans and credit cards, held by the typical consumer living in the UK today.
As a result of this, they are taking steps to clamp down on less reputable loan and credit card companies, as well as high street banks and building societies, by banning certain activities and proposing to introduce much stricter regulation for the loan industry as a whole. This regulation will be enforced by the Financial Services Authority (FSA), that lovely bunch of people who completely missed all the problems with Northern Rock and other banks and allowed the banking sector to get itself into the mess it is currently in.
In a response to the government’s plans, the Finance and Leasing Association (FLA) have warned that, whilst regulation is a good idea, too much of it is likely to slow down any recovery in the economy and could actually cause more problems than it solves. The FLA, which represents the loan industry, says it already promotes an attitude of responsible lending amongst its members, along with initiatives such as allowing unsecured loan customers with debt problems, more time and help to sort out a realistic solution to their problem.
Fiona Hoyle of the FLA commented on the proposals, she said “The industry strongly supports responsible lending and we welcome some of the measure in the white paper. But we already face a barrage of new regulation. There are now real risks for consumers who face reduced credit availability and higher prices. The government need to take action to deal with the wholesale funding problems in parts of the credit market and should avoid regulatory over load. The real challenge now is to maintain availability and affordability of credit, which are under threat.”
