Responding to the proposed no-interest loan scheme, the CFA said:
“We could welcome the creation of a new system for those that are unable to access credit. In Australia these loans are used for a relatively small number of people who cannot afford credit. We know that hundreds of thousands became unable to access credit after the introduction of new FCA rules and a price cap on short-term lending. This may be a solution.
“However, lending can never truly be carried out at no cost and someone will have to pay for the costs of loan funds, there will be administration costs to service the customers and most importantly the costs of default. The proposed feasibility study will have to explore how these loans would work in practice.