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<p>The Government has fundamentally reformed regulation of the consumer credit market,
transferring regulatory responsibility to the Financial Conduct Authority (FCA) on
1 April 2014. Since the transfer, the FCA has taken a proactive approach on consumer
credit, to ensure that all consumers who use high-cost credit products are treated
fairly. The Government welcomes the ongoing work of the FCA to review the high-cost
credit market.</p><p> </p><p>The government established an independent Financial Policy
Committee (FPC) and gave the FPC a primary objective to identify, monitor and take
action to remove or reduce systemic risks with a view to protecting and enhancing
financial stability. To ensure lenders are resilient to defaults related to consumer
credit, the FPC has acted to accelerate its analysis of credit losses that banks could
incur in the very deep recession encapsulated in the 2017 annual stress test scenario.
The FPC has stated that regulatory capital buffers for individual firms will be set
following the full stress test results so that each bank can absorb its losses on
consumer lending, alongside all the other effects of the stress scenario on its balance
sheet.</p>
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