Consumer credit market ‘needs better regulating’

Regulation of the consumer credit market is not providing value for money.

This is the opinion of the National Audit Office (NAO), which found that the structures currently in place are failing to minimise the harm facing customers from unscrupulous trading practices.

Some £176 million was borrowed from credit card companies, small businesses offering hire purchase arrangements and payday lenders in the 2011-12 financial year.

However, the Office of Fair Trading (OFT) is not resourced to carry out the day-to-day tasks required to stay on top of the sector and the NAO pointed to the fact that consumers lost £450 million in 2010-11 because of insufficient regulation.

Amyas Morse, head of the NAO, stated the OFT has "achieved a good return for a small outlay", but it is not in a position to "tackle the full extent of harm to consumers in credit markets" because it has not been given the right powers to regulate effectively.

By James Francis