In a letter to Martin Goulden of the OFT, Chris Lawrenson, head of legal services at the BSA, admitted the organisation had some concerns over the lack of cohesion with the rulings. The letter said: ‘The BSA believes it is crucially important for the OFT to focus its enforcement on the unfair relationship test on the loan sharks who were able to side-step the predecessor test – the extortionate credit bargain.’
It added that a number of firms within the industry are able to ignore the ‘Treating Customers Fairly’ (TCF) initiative implemented by the Financial Services Authority (FSA). The BSA voiced its concern that the OFT was taking its time to regulate the serious lenders, but was ignoring the smaller organisations, who were able to slip through the net.
A spokesperson at the BSA said: “This is a bad thing for the consumer, as they are the people who need protecting.”
Mike Fitzgerald, sales director at Brentchase Financial Services, said: “A lot of people have a vested interest in getting other sections of the industry regulated. I think unsecured loans on credit cards are the real danger and they give the loans market a very bad name. Companies that use a cascading system and whose business model is to put the client into the cheapest possible rate that their credit will allow will have to push their interest rates up if there is any deeper regulation in the secured sector.
“You have to look at the wider picture – loans do have their place in the market. The idea that everything should be regulated is driving us further down the nanny state route. TCF is a first class concept and is serving its purpose. I think the FSA is doing a great job, it has really benefited the customer and the broker, which is good for the industry and goes full circle.”
