A. Thanks Stephen. There are two components to this. First, regulators often get locked into quite narrow views based on the tight legal construct of a product. To make regulation work well, we need to take a step back and look at how a product is sold and also how it is used by consumers. We should seek to give consumers protection and businesses certainty based on how the product operates in the real world.
A good example of this in the UK is home collected credit, which is a single loan from a compliance and legal perspective but, in reality, it is used multiple times per year by many customers, much more like a credit card or overdraft line. Moreover, the business models of many firms in this market rely on this customer behaviour. I would argue it’s far better to take a regulatory stance based on how the product is used than a narrow legalistic reading.
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