Here you'll find details on current regulatory issues.Competition Commission inquiry into home credit in the UK Consumer Credit Act 2006Consumer credit regulation - European Directive on Consumer Credit
In this section of the website, we will post information relating to the Competition Commission (CC) inquiry on home credit.
On 20 December 2004, the Office of Fair Trading (OFT) announced that it was referring the UK home credit sector to the CC for inquiry. This followed a super-complaint launched by the National Consumer Council (NCC) in June 2004.
In the course of the inquiry Provident Financial made a number of submissions and provided extensive assistance to the Commission. We did so in order to provide the clearest picture possible of the home credit sector.
On 30 November 2006, the CC published its final report.
The four remedies outlined in the final report were consistent with the CC’s statement of proposed remedies published in August 2006. The remedies were:
We are pleased that the CC’s own research confirms high levels of satisfaction among customers who find home credit products well suited to their needs. The CC has recognised evidence of innovation within the industry, that the relationship between customers and agents is appropriate and that customers value the service they receive.
We also note that the CC has rejected the concept of introducing price caps. The CC recognises that home credit is valued by many customers and concluded that directly controlling prices would risk causing “a reduction in access to credit” for customers.
The CC’s view was that home credit companies were making profits in excess of the cost of capital. However, it is important to note that the CC recognised in its press release “…both that our profitability estimates may be quite imprecise and that there was not necessarily any straightforward direct link between those estimates and the extent to which prices in the market could be said to be too high.”
Provident Financial continues to reject the CC's analysis of profitability. Evidence from two independent experts, Sir Bryan Carsberg and Professor Colin Mayer, which was presented to the CC, is consistent with Provident Financial's position.
Provident Financial will continue to work constructively with the CC to implement the remedies outlined in the final report, the majority of which are due to be in place by the end of 2007.
Further information about the CC’s inquiry into the home credit sector can be found at: www.competition-commission.org.uk/inquiries/current/homecredit/index.htm.
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The DTI recently completed a lengthy review of consumer credit law which resulted in new regulations and amendments to the Consumer Credit Act 1974. The aim of the review was to ensure that the UK consumer credit market continued to operate in the interests of consumers in a ‘fair, clear and competitive’ way. The changes introduced are intended to modernise the regulation of consumer credit, enhance consumer protection and promote fairness and transparency.
UK consumer credit legislation implements the European Consumer Credit Directive.
The European Commission has been consulting on proposals to modernise the Consumer Credit Directive since 2002. Agreement among EU ministers on how the Directive should be updated was finally reached in May 2007. The proposed update now requires approval from the European Parliament.
The proposals are intended to create a fully fledged cross border market in consumer credit, boost consumer protection and standardise the product information available to consumers.