Good morning!

Today, I'm provisionally looking at:

  • H & T (LON:HAT) - FCA review of unsecured lending business
  • IQE (LON:IQE) - trading update
  • Chamberlin (LON:CMH) - interim results
  • Mirada (LON:MIRA) - interim results
  • Lightwaverf (LON:LWRF) - strategic review


  • Share price: 275p (-26%)
  • No. of shares: 40 million
  • Market cap: £109 million

FCA Review

(Please note that I have a long position in HAT.)

What an unpleasant way to start the week! H&T has been one of my largest positions for a long time. It reached 25% of my portfolio before I finally reduced the size of the position in August 2017, selling coincidentally at around the current share price.

Thankfully, I had no plans to sell any more H&T shares, so this news doesn't bother me all that much - I can continue holding it until the costs of this FCA review have been digested.

The FCA has singled out H&T for a review of its unsecured loans business:

This review is focussing on H&T's creditworthiness assessments and lending processes for HCSTC loans, in light of changes to the Consumer Credit Sourcebook (CONC) rules regarding affordability assessments implemented in November 2018 and the Dear CEO letter issued to all HCSTC firms by the FCA in October 2018.


Some investors avoid this sector entirely, for ethical reasons. Personally I don't think that bank overdraft charges or credit card fees are any better from an ethical point of view - but perhaps that's a debate for elsewhere!

From a practical point of view, and considering the sector as a whole, it has been wise to avoid the short-term lending space. The regulatory environment is making it almost untenable.

Normally, if a borrower defaults on a loan, this is considered to be an unfortunate situation for both the borrower and the lender, who have both miscalculated what the borrower was able to achieve.

But when this happens in the world of short-term unsecured lending, borrowers are considered to be the victims of predacious lenders. This is reflected in huge legal liabilities on lenders, who can be chased for compensation for seemingly trivial…

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