Consumer Credit Firms - Consumer Credit Act (CCA) Changes: 1st April 2014.
Transfer of Office of Fair Trading (OFT) Licensing to Financial Conduct Authority (FCA) and New Regulatory Regime
From 1st April 2014 the FCA has taken over from the OFT as the regulator of all consumer credit firms (CFFs).
Immediate Questions and Decisions to be Addressed
Your first questions and possible actions are tabled below:
|Current Valid Licensing or Status||New FCA Licencing Regime Requirement|
|Do you currently have interim permission from the FCA?||The FCA will notify you of the 3 months' window within which you will need to apply for a full permission.|
|Are you a Firm new to the consumer credit business?||Firms new to the credit industry will need to apply for full authorisation from the FCA.|
|Do you need to amend your existing interim permissions?||You will need to seek prior authorisation by way of a variation of permission application.|
|Are you an Exempted Professional Firm (EPF)?||EPFs can be regulated by their Designated Professional Body (DPB) instead of the FCA if they meet certain conditions.|
|Are you a Self Employed Agent?||Self-employed agents who carry on the business of the firm they represent (which is properly registered as above) and fulfil certain criteria may not need to be authorised.|
|What alternatives are available to you rather than becoming authorised by the FCA?||A number of smaller, lower risk firms will be able to continue to carry on their credit-related business activities by becoming an Appointed Representative (AR) of an FCA authorised Principal firm, but must have already obtained an interim permission to carry on such business whilst the Principal becomes fully authorised.|
MPAC can provide assistance to cover your ongoing compliance needs on a cost effective basis and/or provide full or limited authorisation and AR routes as above. Alternatively, if you want further guidance on the options available to your firm please speak to us.
For an initial, free no commitment conversation, please contact Nick Andrews, Philip Buckingham or Ravi Takhar on +44 (0) 20 3056 0956.
THE WAY FORWARD
The two-tier approach will differentiate between higher-risk (full permission) and lower-risk (lower permission) consumer credit activities
- a six-month transitional period from 1st April 2014 during which, if a firm is able to demonstrate that it has acted in accordance with old CCA requirements and OFT guidance, the FCA will not take action against the firm in relation to those corresponding new rules that are substantially the same.
Many of the FCA requirements for the firms under the new consumer credit regime will not apply to a firm until it has obtained full authorisation. The FCA will direct firms that have obtained interim permission to apply for full authorisation in stages from 1 October 2014 (different categories of firms will be directed to apply within a certain time window). This is to ensure an orderly and efficient transfer.
Once a firm is fully authorised, the following compliance criteria will apply:
- Approved persons requirements
- Prudential standards for debt management firms
- Client assets for debt management firms (including client asset operational oversight function approved person)
- Requirements relating to controllers
- Periodic reporting
- Complaints reporting and publication rules
Key points about the interim permission regime for firms:
- If you have not registered for an interim permission prior to 31st March 2014, you must stop carrying out regulated consumer credit activities. If you do not, you may be committing a criminal offence and you could face enforcement action.
- If you are already authorised under another regime, you will not be given an interim permission; you still need to register if you wish to continue to carry on regulated consumer credit activities.
- You must pay the required fee when you register, unless you are exempt.
- From 1st April 2014, you will need to make the standard status disclosure on your letters to customer and electronic equivalents required of all FCA firms
- You need to be fully authorised before you appoint an appointed representative.
List of services that we can provide:
|MPAC provides:||Cost Basis||Timescale and Notes|
|Initial discussion||Please call - free of charge|
|Documents required to be compliant||Either included in fixed cost registration or can be purchased separately||Required as from 1st April 2014|
|Compliance support post registration||Fixed monthly cost or ad hoc hourly||As from 1st April 2014|
|Application for full authorisation post||Fixed cost or based on costs incurred||Application to be submitted by dates to be provided by FCA likely beginning Autumn 2014|
|Compliance support post full authorisation||Fixed monthly cost or ad hoc hourly||As from full FCA authorisation|