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Friday, 11 March 2016 01:10

CMA Takes Shot At FCA and The Chancellor Over Price Caps - They Don't Work

Yet more evidence emerges of contradictory political scruples in the wake of the report from the Competition and Markets Authority (CMA) into the energy industry as it rejects blanket price capping. What’s good for the goose most certainly isn’t for the gander!! Justice is seemingly a dish best served stone cold when it comes to the virtue of how the Chancellor George Osborne and regulators revenge one another. And so, the CMA and Financial Conduct Authority (FCA) continue to waste tax payers’ money to come to the exact opposing conclusions of what’s best for the consumer.   

Having driven a hasty politically U-turn when George Osborne ended years of resistance and announced a legal cap on the overall cost of Short Term Credit, here at Quick Loans we’re astounded that the payday loans market was ever vilified. The CMA has taken a laissez-faire approach, saying that people have options if they want to take advantage of them and without those options, there’s no justification for price fixing – here here!! Maybe the Chancellor and the two regulators should sit down together and come up with a more coherent and identical argument that provides what they’re all seeking; choices for the consumer to decide? They all work for the common good?! It seems not…. 

The clampdown on the Short Term market imposed in January this year by the FCA, led by Martin Wheatley its chief executive officer, effectively forced all but the biggest lenders out of the market; the same can’t be said for energy providers and the excessive profits they generate. So here’s a question, why is the taxpayer giving up their hard earned cash for the CMA to operate competitive markets when clearly, the FCA pushes the opposite agenda of enforcing non-competitive markets so it can serve its own righteous agenda? 

The barriers imposed by the FCA on the payday loans industry were designed to make loans fairer for customers, even in their own words; if the underlying price changes little as a result. So, what was the point then? Ironically, the FCA said that cost [of a loan] is generally not a deterrent for customers if short-term cash is needed and alluded to paying a utility bill. What to do then, when you need money to pay for household bills but you can’t find it because one regulator says we won’t cap the price of your energy bills but you can’t find the money to pay for it because another regulator has cut off your access to obtaining the money you need from alternative lenders. Every decreasing circles rings true… 

We wonder if David Mann, head of money at uSwitch, the site that encourages you to look for the best deals including energy, will have any scathing words of wisdom given his vocal retorts against payday lenders back in January when he said, “While the rest of the personal finance industry has made every effort to lend responsibly, the failures of payday lenders have stuck out like a sore thumb.” Quick to judge on one industry but clearly not on others.  

It’s the thin end of the wedge - the first step on a slippery slope - when regulators, bureaucrats and the government impose price ceilings or indeed, price fixing. Strategic confusion and weakness, including Mr’s Osborne's own attitude to the role of the state in regulating markets. If these practices become considered as part of their usual tools to rule, then we may as well pack up and leave before we end up living under dictator-rule nonsense. And yes, for the record, that’s exactly what is high on our list of priorities, to operate for the best interest of our clients elsewhere across the pond where being competitive doesn’t leave a bad taste in our mouth.