The UK’s Financial Conduct Authority (FCA) has launched a review of the future regulation of the unsecured credit market, which could see crackdown on companies
This review will explore how regulation can better support a healthy unsecured lending market. It will take into account the impact of the coronavirus on employment security and credit scores, changes to business models and new developments in unsecured lending such as the growth of unregulated products in retail and the workplace.
Current FCA chair executive Chris Woolard will lead the review and might be one of his last roles before leaving the regulator. Woolard is set to be replaced by Nikhil Rathi on 1 October 2020 as the new permeant chief executive.
Once the review is completed, Woolard is leaving the FCA. Upon his departure, he will not take on any external appointment for at least six months.
Woolard will be supported by an advisory group for the review and plans to make recommendations to the FCA Board by early 2021.
This review is pitched to be a major building block for the FCA’s Consumer Credit business priority, which seeks to ensure consumer credit markets are sufficient.
Chris Woolard said, “It has been a tremendous honour to serve as chief executive of the FCA at such a critical time for the country and financial services. I’d like to thank my many colleagues over the last eight years for all their help and support. I am delighted to be asked to lead a timely and significant review where access to sustainable credit is of great importance to so many people.”
FCA chair Charles Randell said, “I am grateful for Chris’s contribution to the FCA, particularly during the last 6 months as he has led us through the coronavirus crisis with huge energy and skill.
“Chris’s deep understanding of the unsecured credit market makes him the ideal person to advise the Board on the development of regulation to support sustainable unsecured lending. Unsecured lending can be critical to helping people through tough times but can cause serious harm if it’s not well regulated.”
One of the companies which could be impacted by potential changes to the regulation is Klarna, which recently became Europe’s highest valued FinTech company.
The buy now and pay later FinTech reached a $10.65bn valuation earlier this month after closing a $650m funding round.
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