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Consumer credit regulation update

CII Policy Briefing

On 1 April 2014, consumer credit regulation will move from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA). This briefing updates on the changes, reflecting recent FCA consultations on detailed rules and fees.

Consumer credit regulation will move on 1 April 2014 from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA). The FCA will take over both the standards and enforcement of the Consumer Credit Act and related instruments. Following an earlier consultation on their overall approach to the regime, the FCA has recently published a detailed consultation explaining specific aspects of their approach to regulation.

  • Interim permission: members who currently hold a consumer credit licence will need to apply for this well in advance of April 2014, or risk carrying on activities unlicensed. The FCA have opened up an on-line application system, and are offering a 30% fee discounts to successful applications made prior to 30 Nov 2013.
  • Details on conduct of business and other regulation: in October the FCA published consultation CP13/10 setting out more details on how the regulation will look. This includes more details on how the conduct of business, supplanted into the FCA handbook as the Consumer Credit (CONC) sourcebook.
  • Stricter authorisation scheme: this will be the gateway through which firms must pass to allow them to access the market. Those firms wanting to offer consumer credit products and services will need to be well run, fit and proper and, where applicable, have suitable business models.
  • Fees: the FCA recently published consultation paper CP13/14 on the details of the permission fee structure. Practitioners already regulated by the FCA will need to apply for a Variation of Permission whose cost varies depending on the activities carried out and the type of firm applying.
  • Group licensing: the OFT offered a group licensing regime, but the FCA will be scrapping this as professional organisations get an exemption under the existing FSMA Part 20 rules. Professionals that are normally regulated by the FCA, eg financial advisers, cannot get this exemption.
  • Timings: FCA CP13/10 on detailed rules closes on 3 December. Its consultation CP13/14 on fees closes on 3 January. Then the FCA will publish a policy statement on final rules in February/March, in time for the launch of the new regime in on 1 April.

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