FCA call for input on the Woolard Review - Which? response

Summary:

• Which? welcomes the opportunity to respond to the Woolard review. The review is particularly pertinent given the current context, with people financially impacted by coronavirus turning to credit to support them through this difficult time. As households become stretched during the pandemic, we are concerned about the risk of an increasing reliance on forms of unsecured credit when aspects of the market may not be working well for consumers.
• We are supportive of innovation in the unsecured credit market as a way of delivering benefits to consumers through useful new products and services. However, regulation of the unsecured credit market must balance innovation with consumer protection.
• Unregulated Buy Now, Pay Later services are becoming increasingly popular, with the market expected to grow over the next few years. Which? has concerns about certain structural features of this market including questions over transparency. The apparent lack of consumer protections compared to other regulated unsecured credit products needs to be addressed.
• We are therefore calling on the Woolard Review to recommend to the FCA Board that Buy Now, Pay Later products are formally regulated.
• Which? has been supportive of the FCA’s temporary guidance to support those experiencing financial difficulties during the coronavirus pandemic. The FCA should consider the broader applications of this guidance. In particular, it should consider how well credit referencing is working for consumers and reducing the time taken to process forbearance complaints.