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08 May 2015 / Alexander Hill-Smith
Issue: 7651 / Categories: Features , Regulatory
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Money, money money…

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Alexander Hill-Smith reviews the new regime for high-cost short-term lending

In recent years, there has been increasing concern about the scale of high-cost short-term borrowing (HCSTC). The volume of transactions is large; borrowers entered into 10.2 million loans of this type totaling £2.8bn in the calendar year 2012/2013. Since then, there has been a decline, perhaps on account of the adverse publicity HCSTC has received, but the volume and amount lent is still considerable. Many of the loans are for small amounts, the average being £260, but there is no financial ceiling on the size of a HCSTC loan.

Public concern is fully justified. These agreements are inevitably expensive in proportion to the size of the advance. While the Financial Conduct Authority (FCA) has recognised that a legitimate role exists for such agreements to cater for situations of temporary financial emergency of a non-recurrent nature, it is plain that hardship has occurred because too many agreements have been entered into in the past. In particular loans have been made to persons unable to repay

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NEWS
The Law Society RFC Festival of Sport returns next month, bringing together legal and financial services professionals for one of the sector’s largest annual sporting events
Legal aid deserts leave almost one in four without adequate access to justice
The Solicitors Regulation Authority (SRA) has warned solicitors and law firms that using artificial intelligence does not alter their professional obligations, amid concerns over inaccurate legal material and client confidentiality
From forgotten interest claims to case-management appeals, a string of procedural developments offers useful—and occasionally cautionary—lessons for practitioners

Jonathan Fisher KC highlights that it now accounts for around 40% of criminal offences, with roughly 70% involving technology, and argues that the UK cannot simply prosecute its way out of the problem. Detection, investigation and prosecution all require improvement, while different fraud types demand tailored responses.

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