Payday borrowers could be left without credit, as lenders are forced to cut back business on delays to authorisation from the regulator, a former Financial Conduct Authority (FCA) worker said yesterday.
The FCA took over regulating the 50,000 consumer credit firms last year, giving them all temporary licences and asking them meet tough new rules before they can receive full authorisation.
But the watchdog is struggling to process the large number of applications, according to Pinsent Masons’ Michael Ruck.
“At the outset the FCA gets in touch and says, ‘we think you should stop doing this work because we need more information’,” he told City A.M. “The work may in fact be fine, but because of delays, firms are taken out of that business and customers cannot get the credit they rely on.”
The FCA declined to comment.