Regulation focusing on debt could actually harm consumers if it ends up restricting access to credit, the Finance & Leasing Association (FLA) has warned.
In reference to the Government's proposed rules about credit card and store card debt, the FLA has cautioned that the consumer credit market is continuing to shrink, with credit card and store card spending levels in August down 8% and 12% respectively, compared with August last year.
Fiona Hoyle, Head of Consumer Finance at the FLA, warned that "as our statistics today show, credit spending is still declining. We must avoid the risk of reducing further the availability of credit or increasing the potential for over-indebtedness ".
"More regulation of the wrong kind risks further shrinkage," she continued. "For many people the primary concern will be getting access to affordable credit. We must do nothing to make that more difficult. We will be working closely with the Government on the practical implications of their proposals to ensure a fair deal for all." They reveal that store instalment credit was down 3% on the same time last year, while car finance was down 15% and secured loans were down a massive 61%. Total FLA consumer finance was down 16%, which is significant as the FLA is 'the leading trade association for the asset, consumer and motor finance sectors in the UK, covering secured and unsecured loan as well as credit and store card providers'.
