Briefing published on relending and the proposed Consumer Duty

The Centre for Responsible Credit published a briefing on 1 February 2022 examining how the Financial Conduct Authority's proposed Consumer Duty could address long-standing problems associated with "relending" in the UK's consumer credit markets¹. The briefing states that the FCA is in the final stages of consulting on its proposals for a new Consumer Duty, which it describes as focusing on ensuring improved outcomes for users of financial services and products¹.

The briefing sets out its purpose in its own words:

The publication is listed as a 15 minute read and is available as a download from the Centre for Responsible Credit's website¹. The briefing does not set out specific figures for the scale of relending, and no estimate of the number of borrowers affected or the value of relending in the consumer credit market is given in the published description¹.

The Centre for Responsible Credit describes itself as having led campaigns for caps on the costs that payday lenders and rent-to-own firms can charge, which it says has saved borrowers an estimated £150 million per year since 2015¹. It also runs a FlexMyRent project, which it says could eliminate the need for social housing tenants to incur any interest at all¹.

The FCA's Consumer Duty proposals apply to firms across financial services, and the consultation referenced in the briefing concerns the rules that would set the standard of care firms owe to retail customers¹. The briefing was published while that consultation was still open, and the FCA's final rules and their commencement date are not stated in the briefing¹.

Why it matters for households

Relending is the practice of repeatedly borrowing, often to repay earlier borrowing, and the briefing links it to long-standing problems in the UK's consumer credit markets¹. Households that use consumer credit, including payday loans, rent-to-own agreements and other high-cost products, are the group the briefing is concerned with¹. The proposed Consumer Duty, as described in the briefing, would require firms to focus on ensuring improved outcomes for users of financial services and products, which could change how lenders assess and treat customers who borrow repeatedly¹.

The briefing does not state which firms or products would be covered by the final rules, nor when any change would take effect for borrowers¹. No date for the FCA's final rules or for their commencement is given in the published description of the briefing¹. The Centre for Responsible Credit's estimate that cost caps have saved borrowers £150 million per year since 2015 relates to its earlier campaign work on payday lending and rent-to-own, not to the Consumer Duty proposals¹.

What happens next

The FCA was in the final stages of consulting on its Consumer Duty proposals when the briefing was published on 1 February 2022¹. The briefing does not state when the consultation closes or when final rules are expected¹. No further steps are set out in the published description of the briefing¹.

For background on how the FCA operates and what it does for consumers, see the guide to the Financial Conduct Authority. For the wider framework of rules and reforms affecting borrowers, see the regulation and policy hub and the guide to reforming the Consumer Credit Act. For issues of access to credit and advice, see financial inclusion, and for consumer rights more broadly, see the consumer protection hub.