National Minimum Wage statistics
This briefing looks at trends in the UK National Minimum Wage, minimum Wage jobs and how the UK compares internationally.
A Westminster Hall debate on the promotion and regulation of financial products on Black Friday has been scheduled for Tuesday 23 November 2021 from 2.30 to 4pm. The debate has been initiated by Stella Creasy MP.
High-cost credit covers a wide range of financial products including bank overdrafts, loans, buy-now-pay-later and rent-to-own schemes. Each product has its own benefits to consumers, but they also carry a risk of consumer harm. This harm may include high repayment costs and a greater risk of financial problems.
Regulation of high-cost credit
The Financial Conduct Authority (FCA) regulates generally regulates credit. It began a review of the sector and subsequently made regulatory changes to various products to help protect consumers, as discussed in our briefing paper Protecting consumers from unfair high-cost credit.
The review found that 3.1 million UK consumers were using these products in 2017, running to billions of pounds in debt. It also found that these products created particular risks to the most vulnerable people.
As part of the review, the FCA also published a report on alternatives to high-cost credit.
Buy-now-pay-later (BNPL)
Despite the review and the FCA’s actions, not all forms of high-cost credit are regulated. One of these is the buy-now-pay-later sector, which offers consumers the possibility of paying for goods and services by instalment. Although such arrangements can help consumers pay for more expensive products over time, it can nevertheless allow them to build up debt quickly and easily.
An exemption in law means that these payment plans are not treated in the same way as traditional credit agreements, so they are not regulated by the FCA.
A further investigation by the FCA – the Woolard Review, which reported in February 2021 – found that many consumers didn’t see BNPL as a form of credit so didn’t consider arrangements as carefully as they might otherwise have done. Although the BNPL market was comparatively small, the value of BNPL transactions nearly quadrupled between January and December 2020 to £2.7 billion.
The Woolard Review said there was “an urgent need to regulate all” BNPL products. In response, the Government launched a consultation into the regulation of buy-now-pay-later, which will close on 6 January 2022.
Wider recommendations on high-cost credit
Although much attention has focused on BNPL, the Woolard Review made wider recommendations about the unsecured credit sector, all of which have been accepted by the FCA. These include:
Further reading
House of Commons Backbench Business Committee, Representations by Stella Creasy MP, 2 November 2021
Library Briefings
Buy Now Pay Later: An “urgent need” to regulate, Library Insight, 5 February, 2021
Protecting consumers from unfair high-cost credit, Library Briefing, 12 February 2020
Coronavirus: Impact on household savings and debt, Library Briefing, 6 July 2021
Official publications
Regulation of Buy-Now Pay-Later: consultation, HM Treasury, 21 October 2021 [consultation closes on 6 January 2022]
The Woolard Review: a review of change and review in the unsecured credit market, Financial Conduct Authority, February 2021
Alternatives to high-cost credit, Financial Conduct Authority, July 2019
Other
Malcolm Le May on CMCs and FS regulation of the future, Providential Financial, 28 October 2021
The role of councils in improving access to affordable credit and financial services for low-income households, Local Government Association, 19 July 2021
This briefing looks at trends in the UK National Minimum Wage, minimum Wage jobs and how the UK compares internationally.
Interactive dashboard providing constituency-level data on wages, expressed as the median gross weekly pay for full-time employees
This briefing covers how the high period of inflation in the UK from 2021 to 2024 continues to affect household incomes, spending, poverty, savings and debt.