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Citizens Advice responds to the FCA’s high-cost credit review update

31 January 2018

Gillian Guy, Chief Executive of Citizens Advice said:

“The FCA’s high-cost credit review update echoes our concerns that rent-to-own companies and unarranged overdraft fees unfairly penalise vulnerable consumers.

“Credit products should help consumers manage their money and not push them into debt.

“It’s encouraging to see that the FCA is willing to intervene in the market in order to protect consumers from high-cost credit debt, and we look forward to seeing their consultation paper in Spring.

“The total cost cap on payday lending has succeeded in reducing the number of people getting into problem debt. The FCA should build on that success by extending similar protections to other types of high-cost credit.”

Background

The FCA’s figures show that more than half of the total charges paid on unarranged overdrafts were applied to just 2% of accounts, while the amount of outstanding rent-to-own debt per consumer more than doubled between 2014 and 2016, from £2,000 to £4,000.

In 2017 Citizens Advice helped more than 340,000 people with debt issues, of which 121,000 people had problems with high-cost consumer credit.

This included 30,000 people in relation to their overdrafts, 8,100 regarding hire purchase and 24,000 about catalogue and mail order purchases.

Notes to editors

  1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.