Lack of credit choices could lead to unregulated lenders

By UK CreditCards.com

Credit tightening may lead to increase in unregulated lendingThe Finance and Leasing Association (FLA) has warned that the struggling credit market could lead consumers into the hands of unregulated and irresponsible lenders.

According to the figures from the group, the credit card market shrank by 8% in April, compared with the same month a year earlier.

In addition, the wider credit market also suffered, with total FLA consumer finance falling by 19% over the same period.

"These figures show the continued pressure on the consumer credit sector," said Geraldine Kilkelly, head of research and chief economist at the FLA.

"They reinforce the need for the government to take action to make wholesale credit available, including in the non-bank lending market."

Ms Kilkelly warned that if the credit market suffers, consumers could face a lack of choice and so could turn towards unscrupulous lenders.

The FLA suggested that the large numbers of new regulations coming from both Brussels and the UK were responsible for the contraction in the market, along with the lack of lending which has resulted from the credit crunch.
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Published: 29 June 2009