FCA director: Credit market must deliver better outcomes
Alison Walters, director of consumer finance at the FCA, outlined the regulator's vision for a more resilient, joined-up, and trusted credit market. Speaking at the Credit Week event, she emphasized the need for collective action and technology to support consumers.
Reforming the consumer credit framework
The consumer credit market has profoundly changed over the last 50 years, moving from paper-based journeys to complex digital products.
The Government's work to reform the consumer credit framework, introduced through the Financial Services and Markets Bill, aims for a more flexible regime supporting competition and innovation while maintaining consumer protection.
The FCA is actively consulting on whether current Representative APR requirements effectively support consumer understanding of credit costs.
This evolution requires a shared vision for the market's future, ensuring decisions build resilience rather than compounding vulnerability.
The FCA plays a leadership role in setting frameworks, such as improving credit information, but stresses that positive change requires coordination and sustained commitment across all market participants, including regulators and consumer groups.
Unlocking responsible innovation
The FCA has adopted an outcomes-focused approach, giving firms greater freedom to innovate while delivering good customer outcomes.
This aligns with the FCA's new secondary objective to support UK competitiveness and long-term growth, which sharpens its core mission.
Sustainable growth in consumer credit must be built on trust and consistent good outcomes, for example, by responsibly widening access to credit for the underserved.
The FCA encourages firms to innovate, test new models, and harness data more effectively to meet diverse consumer needs, provided this innovation goes hand-in-hand with transparency and a clear focus on delivering positive outcomes.
The regulator is engaging with stakeholders through workshops and its Innovation Zone to foster this collaborative approach.
Balancing innovation with protection
The speech outlines an ambitious roadmap for the UK credit market, seeking to harness technological advancements like AI and open finance for consumer benefit.
While the vision for a smarter, more resilient market is compelling, achieving consistent 'better outcomes' across diverse firms presents significant practical challenges.
The success of this transformation will hinge on the FCA's ability to balance regulatory flexibility with targeted intervention, ensuring innovation genuinely serves consumers without introducing new forms of harm.