FCA chief says car rental deals not ‘bad’

The head of Britain’s financial regulator has defended the use of car finance products despite widespread concerns they could herald the next financial crisis.

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), said the growing popularity of car loans was not “bad” in itself, but showed consumers were more happy renting than owning a car.

However, he said the FCA was “not complacent” and there were “issues” with how well consumers understood the terms of the products.

It comes amid concerns that the rapid growth in auto lending could spark an economic crash if the UK is suddenly hit by rising unemployment or higher interest rates.

In a speech in the City, Bailey said: “We are not at all complacent about the overall consumer credit situation, but I don’t regard, for instance, the shift to PCP [personal contract purchase]-based lending as per se bad.”