Consumers have fewer choices in credit market, experts say

Although the consumer credit market appears to be stabilising, borrowers could be offered fewer choices if new regulations negatively affect creditors, statistics released by the Finance & Leasing Association (FLA) have revealed.

New contraction rates are showing signs of evening out, with fresh financial business in the three months to July 16 per cent lower than for the same period a year ago, which is similar to reports from May and June.

However, Geraldine Kilkelly – head of research and chief economist with the FLA – noted that if proposed regulations in July’s Consumer White Paper are enforced, the size of the market could be affected, which may restrict lender choice and “affect the rate of economic recovery”.

The FLA also made clear that consumers have found it difficult to obtain secured loans, given the deficiency of affordable wholesale credit.

Earlier this month, consumer champion Which? observed that customers are not afforded the opportunity of comparing accounts and choosing the one most suited to their needs, due to the lack of transparency in banks’ working practices.

By Sarah Adie