The Woolard Review - A review of change and innovation in the unsecured credit market

This report was commissioned by the FCA Board with the aim of concentrating on innovations in the unsecured credit market and asking whether more needed to be done to ensure a healthy, sustainable market.

The report highlights a few key issues:

• To have a long-term, healthy market certain new credit products that are currently unregulated need to be brought within the regulatory framework as a matter of urgency.

• The economic effects of the pandemic will drive demand for debt advice. A well functioning debt advice sector is essential to support a healthy credit market. Providers of free debt advice need access to secure, long-term sources of funding to ensure that advice is available to those in need. Debt solutions must be suitable - meaning known problems in the personal insolvency sector need addressing – and fees for Debt Relief Orders (DRO) should not prevent the poorest in society accessing the help they need.

• For the good of consumers and firms there needs to be a more outcomes focused approach to regulating the credit sector that looks at how products are used in the real world and consistently regulates on that basis. Regulation should focus not just on affordability, but on conduct across the lifetime of the product. Learning from the experience of Covid-19, there also needs to be a more consistent approach to forbearance across firms.

• Greater emphasis needs to be placed by the FCA, but also the government and other stakeholders on ensuring a holistic approach to key issues – ranging from long term debt advice strategies, boosting the availability of alternatives to high cost credit, and the treatment of the very poorest when they need help.

• There are significant opportunities to build a better credit information market to the benefit of consumers and lenders.

The full review is available here:

The Woolard Review - A review of change and innovation in the unsecured credit market (fca.org.uk)