On 19 November 2013, the APPG on Debt and Personal Finance held a joint meeting with StepChange Debt Charity to discuss the Financial Conduct Authority’s proposals for regulating the payday lending sector.

The meeting provided MPs and members of the Group the chance to question the FCA directly on its proposals and feed in to its consultation.

Shona Alexander, chief executive of Newcastle CAB, discussed the problems caused by irresponsible payday lending. She expressed concern that payday loans were often unaffordable in the first place and trapped people in debt through spiralling charges. Often payday lenders were failing to engage with advice agencies to help clients in financial difficulty and there was evidence of lenders breaking 12 of the 14 promises set out in their own customer charter.

Chris Woolard, head of policy, risk and research at the FCA, set out the new regulator’s main proposals to ensure more affordable lending and adequate protection for borrowers who fall into financial difficulties. These include more binding rules on affordability; new limits on the numbers of time a loan can be rolled over; limits to the use of continuous payment authorities; requirements for adverts to carry a “health warning”; and mandatory signposting to free debt advice.

Responding, Samantha Mitchell, author of a StepChange Debt Charity report on the key early challenges facing the FCA, welcomed the general direction of the new regulator’s plans. However, she said there were several areas where the FCA needed to adopt a tougher approach to improve lender behaviour. These included more robust scrutiny of lenders’ business models; stopping the practice of repeat rollovers; real-time data sharing between lenders; and the introduction of the new rules without delay.

In the Q&A that followed, several MPs including Yvonne Fovargue and Robin Walker suggested the FCA should mandate real-time data sharing as an essential part of the affordability checking process. Chris Woolard indicated the FCA was listening and that if the industry failed to make progress itself, the FCA would look at whether it was in the best position to act.