Retail credit market continues to contract

The latest consumer finance market statistics published by the Finance & Leasing Association (FLA) show a further decline in consumer credit.

This reinforces the FLA's message to the Government that more regulation in these markets could jeopardise the future availability of credit.

Across all channels, consumer lending was down 8% in October. Some sectors saw much larger declines, including the credit offered by high street retailers, which totalled £297 million in October compared with £426 million in the same period last year. The value of new store card finance fell by 33% and store instalment credit by 27% compared with October 2009.  

Retail credit is an important factor in the economic recovery, and these latest statistics show why it is important that the Government thinks very carefully before imposing any further regulatory restrictions on an already contracting market.

Fiona Hoyle, FLA Head of Consumer Finance, said: "The latest figures show a continued decline in most types of consumer credit, and particularly for store cards and in-store credit. We hope the Government will therefore think very carefully before imposing any further regulatory restrictions on these markets. For example, interest-rate caps on credit and store cards and cooling-off periods for store cards could drive some lenders out of the market and further reduce access to affordable credit."