Consumer Credit FCA Regulation

Firms who currently hold a Consumer Credit Licence will only be able to trade under their existing CCL until the 31 March 2014. If you wish to continue trading from the 1st April 2014 then you will need to register for interim permission. By applying for this before the 30th November 2013 you will benefit from a discount of 30% from the interim permission fee, so will pay £150 for sole traders and £350 for all other firms. Registration can be done here.

Timeline

September 2013 to 30th November 2013 to apply for discounted interim FCA permission
December 2013 to 31st March 2014 remaining time not discounted to apply for interim permission to be able to continue trading from April 2014
1st April 2014 the FCA take over consumer credit regulation
1st April 2014 application information released to allow firms to start the FCA application process
1st April 2014 to 31st March 2016 period with which firms must have applied for full FCA authorisation to be able to continue trading from April 2016

Applying for interim permission is a straightforward process; you should ensure your current consumer credit licence is up to date. If you are unsure on the process and need compliance support please get in touch.

From the 1st April 2014 you will be able to apply for your FCA authorisation. A fee will be payable for this and once authorised you will also be subject to annual fees as other FCA regulated firms are. The cost for application and the annual fees have not yet been disclosed by the FCA. The FCA will want to ensure regulated firms are well-run, recognise the risks they face and have: appropriate strategies, systems and controls in place. A big part of this involves firms having the right people in important roles. The FCA have proposed vetting individuals who perform key functions known as controlled functions to ensure they are up to the job, and once they are in their role they are carrying it out effectively. Consumer credit firms will have to deal with the regulatory changes and increased monitoring, this may be new to many firms who have until now had little involvement with the OFT. We can help ease this compliance burden.

You will have to implement any regulatory changes which are likely going to mean changes to documentation, sales process, and monitoring, accounting and overall management controls of the business. We can provide support with all these areas.

Initially we can help you through the FCA application process and provide a variety of compliance support options to ensure your firm is set up compliantly and continues to remain complaint. We have a great deal of experience in dealing with consumer credit and currently deal with a large number of FCA regulated businesses. Our support is friendly and flexible and we can make sure compliance fits seamlessly within your business.

Please contact us for details on costs and the support options available.

FAQ's

Q. My OFT maintenance fee is due, do I have to pay it?: In short yes, most firms now hold a consumer credit licence which is indefinite. If you hold an indefinite licence you will be expected to pay a maintenance fee which falls due five years after your indefinite licence was issued, or last renewed. Failure to pay this will result in your permissions being removed and you being unable to trade.
Q. Im currently looking for authorisation for my new consumer credit/debt business can I apply for FCA authorisation early?: No, if you don't currently have OFT authorisation and need it then you will have to apply for a consumer credit licence. However it would be worth considering the time it will take to obtain a consumer credit licence and if it is worth holding out until April 2014. We can help you obtain a licence in as short a time as possible but a lot will depend on the licence you require and the experience and background of the business and the people running the business. For high risk activities such as debt management businesses then a consumer credit licence can take six months to obtain.
Q. What changes will I have to make to my business and documentation?: You will need to familiarise yourself with some new requirements once these have been confirmed. These requirements will be explained in detail in the consultation paper due out soon. Ultimately this will mean changes to the way the business runs, is monitored and the documentation provided.
Q. Do you provide support to ensure my business is compliant?: Yes, we can help from the outset with new FCA applications, providing the documentation you need and providing ongoing monitoring which the FCA will expect you to evidence. We provide a variety of support options from one off audits to regular support. We find that firms have realised the benefit of having external help with regulation to allow them to concentrate on driving the business forward and give peace of mind regarding any future regulatory inspections they may get.
Q. What is an Interim Permission?: If you wish to continue the activities you are currently licensed for after 1 April 2014 you will need to register with the FCA for 'interim permission'. Interim permission will allow you to continue trading up to April 2016 by which time you should have applied for FCA authorisation. It is essential for you to do this if you want to continue these activities. Apply now before the 30th November to receive a discounted fee.
Q. What happens to my current consumer credit licence on 1 April 2014?: Your consumer credit licence will expire on 31 March 2014
Q. What does limited permission mean?: References to limited permission apply to the full consumer credit regime (as opposed to the interim regime). Firms which qualify (based on the activities carried out) are expected to present reduced risks to consumers and therefore have a proportionately reduced regime which is expected to include: lower application and ongoing fees; a shorter application form; reduced frequency or complexity of reporting to the FCA.
Q. Who qualifies for limited permission?: In summary, firms which only carry on the following activities: credit broking, as a secondary activity to a main business selling goods or non-financial services, for the purpose of financing the purchase of those goods or services for example, motor dealerships and high-street retailers that introduce consumers to a finance provider (this activity excludes persons who sell goods or services in customers homes other than on an occasional basis); not-for-profit bodies providing debt advice for example, Citizens Advice; consumer hire for example, tool and car hire firms; consumer credit lending (except hire purchase or conditional sale) on an interest and charges-free basis by a person whose main business is to sell goods or non-financial services for example, golf clubs or gyms allowing deferred payment for membership. Persons who carry on the lending, broking and hiring limited permission activities can also apply to carry on, as a secondary activity, debt counselling, debt adjusting and credit information services.

For a no-obligation quote or discuss your options please contact us or complete the online enquiry form.

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