CFA Summer Summit Review: July 2020

Like most organizations, we have taken our meetings online, and interest was high for our recent Summer Summit held this time last week.

It was good to talk through the issues that lenders face as we move through the pandemic. With much of our pre-pandemic lending now repaid, members are looking ahead to the role we can play as the economy comes out of lockdown.

Members heard that Helen McCarthy, our Head of Policy, had raised some critical concerns about the masking of customer information, and the long-term lending decisions, at the Westminster Business Forum earlier in the week and these were repeated at the Summit.

While we recognize that we need to take steps to protect family finances, there are significant consequences if credit records continue to be distorted with false performance reports.

There are also macro-economic unknowns that are going to make difficult decisions even more complicated as we all try and predict the future.

Unfortunately, we face a reduction in access to credit, and members heard of significant drops in the supply of short-term credit over the last year.

During the Summit, there were questions about alternatives to short-term commercial lending. There is financial and political support for those that position themselves as alternatives.

However, the banks and credit unions have shown themselves as unwilling or unable to serve these customers. We can only see the tightening of credit.

Meanwhile, other alternatives are just not meeting the demand. Some are at risk of repeating the mistakes of the past by introducing unregulated products and side-stepping rules around affordability and forbearance.

There has also been a decline in demand during the pandemic.

Of course, for some, borrowing is not the best option. Better options need to be made available. There have always been forbearance tools for short-term problems, and we see the development of new longer-term schemes.

However, as people start to move out of the home and back into the workplace, new costs will arise that need to be met. We will need credit to restart the economy and give families the flexibility to get back to work.

CFA members heard that this is the message that we are taking out to stakeholders, through engagement with politicians and regulators. It is not the most straightforward task as it is too easy to make assumptions and allow preconceptions to cloud the discussion.

Jason Wassell

CFA CEO

15th July 2020

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