Loans: Defaulters

HM Treasury written question – answered on 22nd April 2016.

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Photo of Julian Knight Julian Knight Conservative, Solihull

To ask Mr Chancellor of the Exchequer, what assessment (a) his Department and (b) the Financial Conduct Authority has made of the effect that the GC16/2 proposal, published in February 2016, to require lenders to issue default notices before collecting from guarantors would have on (i) the number of borrower defaults subsequently reported to the Credit Reference Agencies, (ii) borrowers' credit scores and (iii) levels of financial exclusion.

Photo of Julian Knight Julian Knight Conservative, Solihull

To ask Mr Chancellor of the Exchequer, with reference to his Department's consultation on enforcing guarantor loans, GC16/2, published in February 2016, whether his Department has received representations from the (a) Financial Conduct Authority (FCA) and (b) any other organisation on the consistency of the FCA's proposed interpretation of the word enforce in section 87(1)(e) of the Consumer Credit Act.

Photo of Julian Knight Julian Knight Conservative, Solihull

To ask Mr Chancellor of the Exchequer, what information his Department holds on the reasons for the FCA changing its policy on whether guarantor lenders should have to issue legal default notices on borrowers before collecting money from guarantors as set in PS15/23, of September 2015, to that set in GC16/2, of February 2016.

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

These are matters for the Financial Conduct Authority (FCA) and relate to FCA Guidance Consultation (GC16/2) issued on the interpretation of provisions in the Consumer Credit Act 1974, regarding whether a default notice should be given to a guarantor before payment is taken from them when a borrower defaults. The FCA is currently considering responses to the consultation and will publish a response after considering the complex issues raised.

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