Consumer finance new business was 13% lower in January than the in same month in 2009, the Finance & Leasing Association (FLA) has reported. It attributed the poor weather and the increase in VAT for the decline.

Store instalment credit, which has held up well throughout the recession, saw a small decline.

Unsecured loans have almost halved over the past 12 months and the second mortgage market was down by 82% over the same period.

The FLA has raised concern that “excessive regulation”” could cause further damage to the credit market. The government announced yesterday that the FSA will take over regulation of second charges