New measures to protect consumers must not work to their detriment, warns Charter UK.
On 1st April, the Financial Conduct Authority (FCA) took over regulation of the consumer credit industry from the Office of Fair Trading (OFT), presenting around 50,000 firms with a tough new compliance burden.
Whilst the FCA believes that around 25 per cent of firms will exit the industry as a result of the toughened scrutiny and strict rules, Paul Clark, CEO of Charter UK, says that it is important not to throw the baby out with the bathwater.
"The FCA's regulation of the consumer credit industry has consumer protection at its core and any efforts to weed out the rogue firms must be applauded. However, we cannot ignore the fact that a need for short-term credit exists amongst consumers," he says. "We need to ensure that these firms understand that whilst the demands that the FCA will place upon them will be stringent and unfamiliar, they are not insurmountable."
Mr Clark says that this will only happen if consumer credit firms are educated to understand the considerable benefits that can be yielded from treating customers fairly and leveraging the insight from complaints. "The truth is that these new regulations don't have to conflict with business operations at all," he points out.
"From a customer service perspective, the FCA will want to see evidence that firms have a clear overview of all interactions with customers and can prove that they were treated fairly.
"If carried out effectively, this change actually has great potential for driving business improvement, as this information will enable firms to identify which factors drive customer dissatisfaction, whilst also highlighting any processing errors or other operational bottlenecks.
"With such important benefits on offer for firms as well as consumers, we should concern ourselves with ensuring that the nation's consumer credit firms are able to meet the burden of the FCA's regulation as efficiently and effectively as possible.
"This way, we can help firms to embrace the burden of compliance and actually improve their offering, rather than simply quitting the market altogether, as the FCA has predicted."