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FCA ‘not complacent’ about PCPs and consumer debt

on 13 October 2017

The Financial Conduct Authority has given an indication on where it stands with regard to PCPs and rising consumer debt. In a speech, FCA chief executive Andrew Bailey said that while rising consumer debt which includes motor finance stands out as a risk PCPs were not a problem in themselves.

 Consumer credit is now worth about £200bn of which £58bn is outstanding in motor finance.


“We are not at all complacent about the overall consumer credit situation, but I don’t regard, for instance, the shift to PCP based lending as per se bad.


“It seems to me to recognise the nature of a car as an asset, that is, consumers are comfortable renting rather than owning the car.


“That said, there are issues that we seek to understand on the terms of such lending and how well they are understood by consumers, so we are not complacent on such terms,” he said.


“Starting with consumer credit, the Bank of England’s Financial Policy Committee in our latest assessment has highlighted that the rapid growth of this area of lending stands out against a generally benign overall credit environment.


“While it is not a material risk to economic growth as a whole, compared to mortgage lending defaults are more likely in a severe economic downturn, posing risks to lenders. There are also risks to consumers, which is where the FCA comes in.

Credit: Motor Trader 

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