Posts Tagged ‘Financial Services Authority’
A Guide to the New Regulations on Consumer Credit
The UK has recently been privy to news that the Financial Services Authority has increased it’s authoritative input, increasing awareness of our collective abuse of consumer credit systems. A continued rise in the rate of consumer credit attained has been witnessed, with the financial services regulating body now tightening controls and implementing specific restrictions on lending.
What effects are we likely to experience, particularly for those who did not abuse credit prior to the recession, and what are the ramifications for those already with a burden of debt?.
In contrast to seeming common sense, the FSA have announced a ban of the providing of self-certification mortgages which has been seen as a move countering the timidly recovering mortgage loan market. These mortgages, according to the The Telegraph, were identified as being one of the many products abused throughout the boom prior to the recession.
Justifiably, the FSA have ordained this in retaliation to individuals finding themselves incapable of maintaining their repayments of credit approved under these loans. The body’s aim is now presumably to impose analogous restrictions on the UK’s larger economic issue of being able to calculate credit card debt and effectively pay it off.
The economic situation has witnessed banks polarise in their lending behaviours which has ultimately resulted in the average consumer suffering. It would appear that as a result of a select few unable to effective manage debt, those with sensible attitudes to credit have been penalised by the new measures.
There has been a significant increase in the figures of individuals both applying for Protected Trust Deeds; and joint IVAs (Individual Voluntary Arrangements) and whilst this suggests an honourable approach to meeting debt repayments it also supports the forecasts of a larger crisis within personal finance. The FSA’s increasing control over credit cards especially may produce an increase in debt management cases though it is yet to be witnessed as to whether this will precede a change in attitude in institutions and consumer markets.