PRA Dear Chair letter – follow-up to PRA Statement on consumer credit

The PRA has published a Dear Chair letter which follows up on its Statement on consumer credit issued on 4 July 2017 (our blog is here). The previous PRA Statement raised ten issues for firms to consider and firms with material consumer credit exposures were required to respond to the PRA by September 2017, with responses to be approved by the board. The Dear Chair letter sets out the PRA’s key findings from the responses and sets out action points for firms. The PRA’s main finding concerns weaknesses in management information (MI) and governance, with other findings covering medium-term economic risk; affordability assessments; and some product specific points on 0% interest credit cards; and on larger or longer-term personal loans and motor finance. Key messages from the PRA include: some board risk committees do not routinely receive sufficient standardised MI on consumer credit to recognise when a shift in asset quality or portfolio performance is taking place;…

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