Loans: Unfair Practices

Treasury written question – answered on 12th March 2020.

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Photo of Rehman Chishti Rehman Chishti Conservative, Gillingham and Rainham

To ask the Chancellor of the Exchequer, what recent steps he has taken to eliminate unfair practices by logbook loan companies.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

In 2014, HM Treasury asked the Law Commission to review the legislation underpinning logbook loans. During consultation stakeholders raised concerns that any reform could increase consumer detriment, particularly amongst vulnerable consumers. Furthermore, the number of logbook loans also fell substantially from 52,000 loans registered in 2014 to 10,194 in June 2019. For these reasons, the government decided not to take forward reform of this legislation.

In 2014, the government also transferred regulatory responsibility for the consumer credit market to the Financial Conduct Authority (FCA). Logbook lending is part of the FCA’s new supervisory strategy for high-cost credit lenders, which will run until 2021.

Treasury ministers and officials meet regularly with the FCA and continue to work closely to ensure consumers of financial services are treated fairly.

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