The Finance and Leasing Association is set to introduce stricter regulations for short term loan borrowers and also make it less appealing for new store card registrations, both for the staff who promote them and for those who may resort to signing up for the cards, usually with high APR, because they are available at the point of sale for something they would like there and then but perhaps cannot really afford.
The new rules, which will be known as the FLA Lending Code, have been introduced as a measure that, the FLA claims, will protect consumers who are already in financial difficulty. Presumably they mean by making it a nanny state, they are not allowing the public their pocket money because they’ve been a naughty boys and girls in the past.
Just reading through the proposed changes to the law, they may be legal but there is a large section of society going to lose out in this new legislation, all because of the irresponsible actions of a minority of people who are stretching beyond their means, as they know only to well, when they take out a quick cash advance or pay day loan.
The one amendment that sticks out straight away, which will directly take money out of the pockets of innocents who have no choice but to offer store cards for big branded shops’ clients is the amendment stating that shop staff can no longer earn commissions from the sale of such accounts. Do the FLA think that this will stop the shop owners from forcing their staff to offer the store cards? Of course not. It’s just that they won’t get paid for that aspect of the job. Is that ruling not a violation of human rights?
However, as the suspension of use of a store card will now be an automatic seven days from application date and also no discounts or sales promotions in direct conjunction with a product that may be on offer with a new application can now be applied to the sign-up transaction, take-up rates for store cards may soon see a very quick decline; especially given that interest rates tend to be unattractive (not quite as high as short term loans, but greater APR’s than high street lending, by far) and owe much of their populaity to users of their store’s credit facility who could probably afford to pay their bill anyway, but just like having a top-notch store card in their purse to prove their status.
The only losers will be the staff, as those denied store credit can and will turn to quick cash advance loans via other means (explained in next up, Store cards loss is payday lenders gain.