The Financial Conduct Authority (FCA) has recently formally taken responsibility for regulating the £200 billion UK consumer credit market. 50,000 businesses who offer some form of credit to the UK consumer will now be subject to the FCA’s consumer protection rules and Principles for Business. According to the FCA, this means every person that uses a credit card, has an overdraft, seeks help from a debt management firm, or takes out a loan will be better protected than before.

The FCA’s regime now extends to regulate:

• Where on average, 26.4m UK households each owe £6,000 in consumer credit debt
• The £200bn lent in consumer credit in 2013 and £158bn currently owed in consumer credit debt (Bank of England)
• Over 30 million current accounts with overdraft facilities, upon which £8bn is owed (source British Banking Association)
• A £150bn credit card market with over 2.3bn credit card purchases each year
• Over 500 payday loan firms
• 50,000 businesses in addition to the 27,000 already regulated by the FCA. Consumer credit providers will need to ensure that they give customers the right information to make informed choices, that their services meet consumer needs and that people in difficulty are treated fairly.

The biggest changes come for pay-day lenders and debt management companies, including:

• limiting the number of loan roll-overs to two
• restricting (to two) the number of times a firm can seek repayment using a continuous payment authority (CPA)
• a requirement to provide information to customers on how to get free debt advice
• requiring debt management firms to pass on more money to creditors from day one of a debt management plan, and to protect client money.