The Financial Conduct Authority (FCA) has today set out a proposed price cap on the rent-to-own market and an update on its work on alternatives to high-cost credit. The proposals are designed to protect people who use rent-to-own credit and outlines ongoing work on availability and awareness of alternatives to high-cost credit.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “This price cap for rent-to-own-firms is very welcome news, and I am pleased the FCA has listened to the advice sector’s concerns on this form of borrowing. Following its successful intervention in the payday loan market, this is another sign the regulator is taking problems with high-cost-credit seriously.
“While a 100 percent price cap will offer greater protection to people who use this market – who are often vulnerable and usually on low incomes – the FCA should consider going further by also capping late payment fees, which can escalate quickly.
“We also hope to see further action from the FCA in other areas of high-cost credit, including on logbook loans following the government’s disappointing decision to shelve the Goods Mortgages Bill.
“Tackling problems with high-cost-credit is of course only one part of the solution – so it is good to see that the FCA are also looking at affordable credit. Together with the Government’s decision to explore a possible No Interest Loan Scheme, we are beginning to see momentum build on this crucial issue.”