Sorry Andrew Bailey - FCA, Responsible Borrowing Not Lending Should Be Your Focus

We’ve just read the utter nonsense that’s come from the Chief Nanny at the FCA Andrew Bailey in his The Times article. Blaming lenders not borrowers. He simply does not understand the realities of what is going on in the real world. Or he is refusing to accept reality. With this he is doing a disservice to both lenders and borrowers.

Responsible lending is essential to protect the vulnerable, says Andrew Bailey of the FCA

He seems to have gotten it into his head that it is the FCA’s job to manage our business as a loan site. He wants to tell lenders who they can and can’t lend to – why?

What experience does he or anyone else at the FCA have of ever running a lending service? Are we missing something here? Have they had some amazing success at running a lender according to their own sermons?

The FCA isn’t a shareholder in any lender I’m aware of. In most lender’s there are shareholders and directors to look after that side of things. These are more than sufficient to provide good governance. If they aren’t, then they can be replaced and the business moves on. That’s the way it works. Business that can’t adapt die and new ones spring up. 

When we applied for our lending license, we were required to submit a business plan – why? We never proposed to use public funds to fund lending. Why should our private business therefore ever be guided by public servants like some Soviet Commissar. This wasn’t the Soviet Union the last time we checked.

If Andrew (or the FCA) wants to run a lending service then he should get out here and start a lending service. I think many in the industry would laugh as his snowflake view of the world and borrowers suddenly gets a very rude awakening. If he succeeded then I’d be the first to say well done. By the way, spending £70,000 on a new logo might be one of the first things to stop in private business land. 

But the truth is that nobody would miss his business going under and that is the reality of the situation. The world did not end when Welcome Finance went under, nor did a plague of locusts descend on the UK when London Scottish Finance went out of business. People reading this will be asking, who are they? – yep that’s the point. The world keeps moving when businesses go under in the car industry and so it does in finance. Lenders going out of business is perfectly normal, it’s a good thing.

As far as we know, no short term lender has made a profit for several years. Just how long is that sustainable in Andrew’s view is unknown. Though he states in his Times article “However, we don’t want firms to unnecessarily restrict credit, as this could negatively affect people who may need it to manage temporary cashflow shortfalls or to plan for the future. We also don’t want to increase the cost of borrowing as a result of our rules. We need a proportionate solution.”

Andrew, your words say one thing, your actions say another though.

All of his rhetoric seems to be against lenders with zero changes to reckless borrower’s behaviour. Andrew needs to publicly acknowledge that reckless borrowers are putting up costs for responsible borrowers in the same way shoplifters push up costs to everyday shoppers.

If Andrew was in charge of a Supermarket regulator, he would be currently going round blaming the shops for allowing their goods to be stolen, asking for a business plan to how they can stop their goods from being stolen, then enacting regulations where supermarkets were threatened with being closed down and having their licenses removed should they look at the shoplifter the wrong way. All this whilst never mentioning the shoplifter’s behaviour as being to blame for the price increases for everyone.

It’s complete and utter madness.

Let us give the FCA some hints here at how to change things for the better for people.

• Make it a criminal offense to lie on a finance application form – obtaining a pecuniary advantage or whatever is the current term in the current fraud act. It’s clearly fraud! People think it’s a sport to lie on applications, no lender takes them seriously, it’s a joke.
• Put bankruptcy timescales back up to 3 years. 1 year to clear one of bankruptcy seems to portray it as some kind of game. Comparative jurisdictions all show the longer the bankruptcy term, the more responsible borrowers tend to be.
• Let lenders collect debts in the same way that the BBC and the local Council’s do. Throw people into prison if they don’t pay.

Those ideas won’t go down well in snowflake land and that is why costs keep rising for the public. Until Andrew starts to address the real issues and stops blaming the victims (lenders), this won’t end and the more gimmicks he will need to invent for the next press release he makes. It’s all too easy to keep blaming lenders. 

From looking at the comments on The Times article, and recent Daily Mail articles. It appears that the public is turning against the FCA and it's Nanny'ing behaviour. It's about time too, this has to stop.