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| less than a minute read

Is there a future for subprime lending?

As discussed in today's opinion piece in the FT, the different treatment of Amigo Loans and Provident is interesting, as both firms use insolvency tools to try to put a cap on customer redress payments. 

Perhaps even more interesting is considering the ultimate end-game for the FCA. Restrictions on traditional bank lending and Covid-19 are likely to continue to lead to demand for non-standard borrowing, whilst at the same time, FCA restrictions appear to be compromising the business models of many lenders. Many customers are likely to be left with no legal means to borrow.

The market will be keeping a close eye on the FCA to understand what the market for non-standard lending looks like in the medium-term, and what this means for existing (and future?) players in this challenged industry.

The FCA’s pursuit of Provident helped speed Britain’s biggest subprime lender towards obsolescence yet customers who were mis-sold will receive little in the way of redress, and there’s no plan for what might appear in its place.

Tags

financial services, regulation

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