Andrew Bailey's New City Agenda speech last week, on High Cost Credit, was notable for several reasons. It's four years since the FCA took on responsibility for consumer credit regulation, and it was clear that political interest in the sector hasn't diminished, hardly surprising given the figures quoted here and the persistent increases in household debt during the period.

The focus of the speech was high cost credit, which I'll come back to, but it's worth lingering first on the wider context. The OFT regime the FCA inherited cost c.£10mn per year, the FCA one about £40mn. On the face of it, this 400% increase is impressive enough but I suspect the reality is significantly more. This is due to the complexity of the sector, its sensitivity to the macro economy, and the extent of vulnerability of the customer base.

However, consumer credit didn't make it into Andrew Bailey's Business Plan introduction last month. This was understandably dominated by Brexit, but it was at least mildly surprising it didn't feature alongside pensions and Open Banking. In reality, irrespective of Brexit, consumer credit will continue to soak up both resource and senior attention. 

Looking ahead, funding this effort will become an increasing strain, especially given the relatively small scale of the consumer credit fee blocks for the FCA to draw on. I predict fees policy, likely to need to change anyway post Brexit, will be altered to enable increases in consumer credit funding.

Which brings me back to high cost credit. This is where - with the introduction, under intense political pressure, of its payday cap - the FCA made its first (and still biggest) impact on the sector. As Andrew Bailey's speech made clear, it's priorities, even within high cost credit, have largely moved on - to unarranged overdrafts, rent to own, and home-collected and catalogue credit.

But the payday cap continues to cast a shadow. The main underlying reason is that high cost credit (and I include credit cards in this), bears strong similarities to a waterbed, with regulatory pressure in one area rapidly pushing the demand elsewhere. Thus, the payday cap - which, broadly, stops interest and other charges exceeding 100% of the loan itself - looks odd when there is no such cap on, for example, unarranged overdrafts, where charges can comfortably exceed that level. 

This, and other similar mismatches, causes considerable angst, and what Caroline Normand of Which? described as "impatience". Andrew Bailey promised a roadmap at the end of May but, as I've suggested before, the FCA has actually been quite cautious in this space, with credit cards - easily the largest market - the obvious example. For good reasons, the regulator is worried about unintended consequences in a highly vulnerable sector to which it is still relatively new.

The most obvious gap is that there's not yet a clear picture of what a good high cost credit market would look like. The speech, and some of the Q&A afterwards, talked about credit unions and unspecified "alternatives". Meanwhile, the difficulty of estimating affordability is acknowledged but unsolved. 

Consumer credit, and especially high cost credit, constitutes a huge regulatory challenge, particular to a regulator with so many other very different priorities. A clearer recognition of the waterbed nature of the market and less of a one-size-fits-all approach to firms in the sector would be good next steps. The upcoming FCA regulation of claims management companies (CMCs) next year will add further complexity.

On any realistic forward view, the credit sector - both as a whole and high cost credit within it - is only likely to become more critical to both regulators and the economy over the next few years. And its unpredictable nature means it's likely to continually intrude upon the FCA's best laid plans.