FS17/2: High-cost credit and review of the high-cost short-term credit price cap

We are publishing our response to the Call for Input into our review of high-cost credit products. This includes our decision on the future of the high-cost-short-term credit (HCSTC, or payday lending) price cap.

Show FS17/2 (PDF)

In this Feedback Statement we set out our:

  • decision to maintain the HCSTC price cap at its current level, with a commitment to review it within 3 years to ensure that it remains effective
  • findings about high-cost credit products, including overdrafts
  • priorities for the next stage of the review, which will focus on overdrafts, rent-to-own, home-collected credit and catalogue credit

Erratum: In the version of FS17/2 published 31 July 2017, we incorrectly referred to fees and charges for unarranged overdrafts under Lloyds Banking Group’s revised pricing model announced in July 2017. Changes have been made to paras 4.22, 4.40 and 4.64, and Figures 4.1 and 4.2 to remove or amend these references.

Who this applies to

This feedback statement will affect:

  • consumer credit lenders that provide HCSTC (Section 2), other types of high-cost credit lending (Section 3) or overdrafts (Section 4)
  • trade bodies representing these firms
  • other consumer credit firms and trade bodies
  • consumer organisations

Next steps

We will investigate the issues outlined in the paper further and for those issues where further research shows intervention is needed and justified we aim to consult in Spring 2018.

Update

In our Feedback Statement, we explained that we would take a leading role in supporting collaboration to share best practice and foster innovative thinking in relation to provision of alternatives to high-cost credit and would convene a forum to encourage cross-agency public policy solutions. 

We hosted three roundtables in September and October. These covered two areas: a discussion to identify and address barriers to expanding alternatives to high-cost credit, and a focused discussion on the provision of essential goods. This paper summarises the issues and ideas raised by participants in our roundtables, which the FCA may use to inform its views but do not necessarily reflect the views of the FCA. We are considering the issues raised further with a view to identifying opportunities for increasing access to alternatives and making recommendations in our Spring Consultation Paper.