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Financial Conduct Authority - Chasing Headlines, Not Results.

The Financial Conduct Authority (FCA) is following in the footsteps of the Crown Prosecution Service. Instead of seeking results which are genuinely in the public interest, it is chasing headlines.

On BBC Radio 4 this morning some expert for KPMG said the FCA is showing courage in trying to deal with issues.I beg to differ.

The FCA is in reality mostly training its guns on easy targets.

Take the Pay Day Lenders.Cue a big announcement from the FCA along the lines of " those lenders which cannot meet our tough new rules may be forced out of business". This, it is claimed, may drive 25% of such lenders out of business.

All this, of course, misses the main point. The reason that many people have turned to Pay Day Lenders is because other sources of loans have dried up since the banking crisis of 2008.Driving 25% of these new providers out of business still leaves 75% levying interest rates far higher than should be available from conventional lenders.

What the FCA should be addressing, in company with the likes of the Treasury Select Committee, is the re-opening of the normal access to loans available before 2008. Many of the loans now granted at APR of 4000% should be an opportunity for the High Street banks to improve their own profitability. If banks take up this challenge, ALL Pay Day Lenders will soon be put out of business.

Of course, working quietly behind the scenes to encourage Banks to lend does not grab headlines or get you an interview on Breakfast Television. In this case, however, high profile doesn't translate into worthwhile results for hard-pressed borrowers.

 

Tuesday, 1st April 2014

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