Balance needed in loan regulations

Tue, 06 Jul 2010

An expert has urged the government to take care before introducing any new regulations that could potentially disadvantage individuals looking for loans.

In a speech to the Finance and Leasing Association's Consumer Finance Conference, Stephen Sklaroff, director general of the organisation, argued that regulations that were recently implemented are already affecting the availability and affordability of credit .

He also suggested that there was a risk that, unable to get personal loans from within the regulated market, people may turn to loan sharks.

Mr Sklaroff added: "If we are to avoid the serious social and economic consequences of a smaller, more polarised consumer credit market, a proper balance needs to be struck between consumer protection and maintaining a competitive market."

Demonstrating how the industry was already being affected by regulation, he also pointed out that, in April, the amount of credit granted by FLA members was nine per cent lower than in the same month last year.

According to Credit Action, UK banks and building societies wrote off a total of £9.6 billion in loans to individuals in the year up to the end of the first quarter of 2010.
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