FCA publishes Woolard Review of the unsecured credit market

The FCA has announced the publication of the findings from the Woolard Review of the unsecured credit market.

In September last year the FCA asked Christopher Woolard to undertake a review of change and innovation in the unsecured credit market, which includes products such as credit cards and store cards, overdrafts, personal loans, high-cost-short-term credit, buy-now pay-later and home collected credit.

More than 42.5 million people in the UK used consumer credit during 2019, with UK households owing close to £250 billion to consumer credit providers.

The findings of the Woolard Review have now been published. They set out 26 recommendations to the FCA (and other government and non-governmental bodies) intended to create an unsecured credit market fit for the future.

These include:

  • Unregulated buy-now pay-later products should be regulated by the FCA 
  • Free debt advice services should receive increased funding
  • The FCA should work with the Government and Bank of England to reform the regulation of credit unions and Community Development Finance Institutions
  • More should be done to encourage mainstream lenders into the unsecured credit space
  • Regulation should be outcome-driven and reflect how consumers use products in the real world 
  • Regulation should deliver similar protections against similar harms
  • Products should be more affordable and there should be an increased focus on lenders meeting consumers needs throughout the product lifecycle
  • The FCA should review repeat lending
  • The growth of alternatives to high-cost credit should be encouraged
  • There needs to be a more prescriptive approach to forbearance. 

The FCA has said it accepts the report’s contention that there is a strong and pressing case for bringing buy-now-pay-later (BNPL) providers into regulation and has written to the Economic Secretary to the Treasury setting proposing that the FCA work with the government to design appropriate regulation.

The FCA has also published transcripts of consumer views on the positives of buy-now pay-later and the potential risks – as well as letters from the FCA to Treasury and correspondence exchanged between Christopher Woolard and the Economic Secretary to the Treasury.

The FCA has accepted the recommendations of the Woolard Report, and said that it and will provide further details of its response in April and thereafter report on progress made a year from now.

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