Press Release

FLA calls for proper assessment of consumer credit proposals

27 September 2006

FLA (Finance & Leasing Association) this morning responded to Datamonitor’s report into unsecured debt in Western Europe. Its conclusion that the UK has the highest levels of unsecured debt comes as no surprise given that the UK is the largest consumer credit market in the EU. Consumer credit has been a key driver of UK economic growth.

The report urges UK lenders to seek opportunities overseas. Our experience shows that many UK businesses do operate in other Member States by establishing subsidiaries. However, the idea that they should pursue cross-border activity from a UK base, as envisaged by the proposed Consumer Credit Directive, is flawed. Firstly, there is no significant consumer demand for such products. Secondly, there are numerous barriers to entry to new markets, from the legal infrastructure to different tax regimes.

Edward Simpson, FLA Head of Public Affairs said:

“We would urge those calling for a harmonised consumer credit market across the EU to conduct a rigorous economic impact assessment to ensure that consumers and business alike will benefit from such a model. Earlier independent research showed there would be a negative impact on the UK economy. ”