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<p>The Government has fundamentally reformed regulation of the consumer credit market,
including payday lending, by transferring responsibility to the Financial Conduct
Authority (FCA) in 2014. This more robust regulatory system is helping to deliver
the Government’s vision for a well-functioning and sustainable consumer credit market
which is able to meet the needs of all consumers.</p><p> </p><p>Where the FCA has
found issues with firms’ practices through its supervision process, it has acted.
However, many complaints regarding payday lenders originate before the FCA was responsible
for the regulation in this market.</p><p> </p><p>When a firm enters administration,
assets are pooled and used to cover customer redress claims and administration costs
with these claims being addressed in order of the creditor hierarchy. The payment
of redress claims is a matter for the administrators.</p><p> </p><p>The Financial
Services Compensation Scheme (FSCS) is the compensation scheme of last resort for
customers of UK authorised financial services firms and is funded by a levy on industry.
The FSCS is an independent non-governmental body and carries out its compensation
function within rules set by the Prudential Regulation Authority (PRA) and the FCA.
The FCA has the power to decide which activities are given FSCS protection. In 2016,
the FCA decided not to extend FSCS protection to most consumer credit activities because
it believed other regulatory requirements were sufficient. The full reasoning behind
the FCA’s decision is set out in a letter from its Chief Executive to the Chair of
the Treasury Select Committee on 15 February 2019.</p>
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