Financial Conduct Authority (FCA) Chief Executive Officer  Andrew Bailey said he does not view the shift to PCP based lending as ‘per se bad.’

In a speech, Bailey said: “It seems to me to recognise the nature of a car as an asset, that is, consumers are comfortable renting rather than owning the car.”

“This is not to say that the FCA is not looking at PCP, there are issues that we seek to understand on the terms of such lending and how well they are understood by consumers, so we are not complacent on such terms.”

”First, we use a range of policy tools. Sometimes a cap or limit on cost is appropriate, other times it seems more appropriate to use nudges and targeted transparency to change practices.”

“Second, it is important that we understand the business models of firms, not because we want to dictate them, and firms must earn a return on capital, but understanding business models is important to see into the balance of returns from products and groups of customers, and to allow us to challenge and achieve our statutory objectives.”

“I am not convinced that we have an appropriate system in this country for the sustainable supply of such credit. The FCA alone cannot make this happen, but we have started discussions using our ability to convene to see what might be possible and how stakeholders could work together.”