Motor finance lenders have been urged by politicians and debt charities to reveal how much of their lending is subprime, according to news reports.
The calls came just days after Andrew Bailey, chief executive of the Financial Conduct Authority (FCA) revealed that he had been talking to American regulators for advice regarding the motor finance industry.
Reports indicated that MPs were concerned that motor finance lenders did not publish figures on the prevalence of sub-prime lending to those on low incomes or poor credit.
According to reports, Rachel Reeves, Labour MP for Leeds West and a former shadow Treasury minister, said: “Car companies are vulnerable to bad debt and defaults while buyers are racking up debt that may well turn out to be unaffordable.”
In the Bank of England’s ‘Financial Stability Report’ for June 2017, the Financial Policy Committee (FPC) warned that significant increases in consumer credit such as motor finance must be watched closely.
Adrian Dally, head of motor finance at the Finance & Leasing Association (FLA), said: “Our members provide the information the regulators ask for and are obviously of sufficient confidence that they have the data they need.”
A report by the Financial Ombudsman Service found that complaints about personal contract purchase (PCP) had increased from the previous year.