Jon Holt, Head of Financial Services, KPMG UK responds to the FCA’s trio of papers on consumer credit.
Responding to the FCA’s trio of papers on consumer credit, Jon Holt, Head of Financial Services, KPMG UK, said:
“The FCA promised to build a better market for consumers and today’s commitments are another positive step towards that.
“We have become a nation dependent on debt - one in ten UK adults spend between 60-100% of their pay before the end of payday. As interest rates rise, the cost of credit will too, and ever more people may find themselves relying on an overdraft to bridge the gap. Therefore, controlling the cost of unarranged overdrafts could go a long way towards helping some of the most vulnerable in society.
“In the short term this will come at a heavy price for cost conscious banks, but, in the longer term these measures could move us away from a culture of free banking which will boost competition and encourage a new wave of growth in the UK banking market. There will always be a social need for banks to provide a basic bank account free of charge but, those consumers who can will become accustomed to paying a little extra in return for ‘add ons’, for example paying for a paper statement from an online product. Slowly this will build a culture where paying for financial services is the norm and that will remove a significant barrier to entry for new start-up banks. More competition will be good news for the economy, banks and consumers alike.”
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