Anne King said that the council is worried about the dangers vulnerable Islanders face when borrowing from companies which are not mainstream banks and added that the current professional code of conduct on borrowing is ‘inadequate’.
Mrs King said that representatives from across the financial services industry have met to discuss the issue and added that she hopes greater regulation will be introduced once a review, which is being carried out by States officials, is completed.
Her comments come after the Channel Islands Financial Ombudsman, Douglas Melville, and Citizens’ Advice chief executive Malcolm Ferey both said last month that legal protection for consumers in Jersey is lagging behind the UK in the non-bank lending sector.
Mrs King said that while a code of conduct does exist for lending in Jersey, the council does not view it as fit for purpose and the banking industry thinks that it is ‘toothless’.
‘There is currently a code for consumer lending in practice and this was put together about eight or nine years ago,’ she said.
‘It just became evident that there is no regulation there for consumer lending, so anyone can just set up and start lending [in Jersey]. We felt that the code was inadequate.’
Mrs King said that the current regime creates an ‘uneven playing field’ where mainstream banks are highly regulated but other companies which provide loans and credit are not.
‘If you are borrowing from a bank, or someone like that, they are clearly very regulated, whereas anyone could set up and be a lender and there would be no regulation about how they behave, the interest rates they offer, the demands they put on the customers or the information that they give out,’ she said.
‘That creates quite a vulnerability with things like payday loans. People who are vulnerable are probably not making the best decisions and can get caught out. So it’s an area that we feel strongly that there needs to be some form of regulation.’
The Jersey Consumer Council has met with representatives in the sector, the ombudsman, the Jersey Financial Services Commission and Trading Standards to address the matter.
The Chief Minister’s Department has also become involved and has committed to carrying out a consultation to research the difficulties Islanders are facing, Mrs King said.
