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The consumer credit landscape remains barren

The consumer credit landscape remains barren

Category: Money

Updated: 30/11/2010
First Published: 30/11/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The consumer credit market continues to stagnate, as new figures show that lending fell by 6% in September.

Falls in lending reflect a cautious approach from consumers, while lenders have also become reluctant to lend to people with a chequered credit history.

Figures from the Finance & Leasing Association (FLA) have revealed the UK's high streets were hit hardest by the slump, as credit and store card spending fell by 8% and 22% respectively.

In other parts of the consumer finance market, personal loan lending fell by 5% to £591 million in September compared with the same month in 2009.

The FLA's director general, Stephen Sklaroff, recently stressed the importance of avoiding further damage to credit markets when he gave evidence to MPs as part of the Treasury Committee's inquiry into financial regulation.

The only market to record a rise in lending during the quarter was motor finance, as lending increased by 2% annually.

"The new figures show that consumers continue to take a cautious approach to spending, with a decline in the amount of credit granted almost across the board," Fiona Hoyle, FLA Head of Consumer Finance, said

"But it's important to remember that, in absolute terms, FLA members have lent £12.5 billion in the past three months, allowing consumers to make essential purchases.

"We have explained to MPs and to the Government that any new regulation must be well-targeted or it risks entrenching the problem of shrinking markets and not inhibit the contribution of consumer spending to the economic recovery."

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