The Financial Conduct Authority (FCA) has said that personal debt levels are now high enough to warrant the whole sector coming under their regulation.

Previously the FCA had regulated payday lending to protect customers. It now believes that the whole of the high cost unsecured credit market needs looking at.

The FCA has produced a 36 page document which specifically focuses on personal finances and debt levels. The plan is to attempt to protect vulnerable customers. It also has a focus on the study of long term savings levels and the completion for compensation of Payment Protection Insurance (PPI).

However, the real focus will be on the big increase in consumer borrowing which is currently happening and has increased over the previous 12 months. Debt levels have increased for households due to higher take up of unsecured loans, overdrafts, credit card debt and car finance debt.

The FCA report echoes concerns by the Bank of England. I have previously blogged about the Bank’s concern that there had been acceleration in debt over the last year.

Both the FCA and the Bank of England are concerned that UK lenders stand to lose significantly on their consumer credit loans if there is an economic downturn and borrowers default on their credit cards and other personal loans and debts.

The focus remains on unsecured debt and not secured debt such as mortgage lending, (which amounts for 70 per cent of all loans to households).

The FCA is conducting its own inquiry into the full range of unsecured consumer debt products, from overdrafts to door-to-door lending and all other forms of loans and credit cards.

It will be interesting too see the outcome of the FCA’s study and whether there is tougher regulation on the providers of unsecured debt.

If you are looking for debt advice please contact Farleys Solicitors on 0845 287 0939 or send your enquiry through our online form.