All consumer credit firms who will remain regulated by the Office of Fair Trading (OFT) are advised to make immediate contact with the Financial Conduct Authority (FCA) regarding their intentions come April 1, if they have not already done so.
For any OFT licensed firm who intends to continue with credit activities after April 1, when the FCA takes over as regulator of this sector, this is a final reminder that they need to register for interim FCA permission before the switchover date. In spite of how close it is now to the switchover date, any firm who has not done so does not need to panic, as the interim permission registration process is purely an administrative exercise that takes a matter of minutes.
Any firm currently licensed by the OFT which has decided to cease credit-related activities also needs to make contact with the FCA, in their case they need to inform them of their intentions. Any firm who has already informed the FCA of this in an application for a rebate on their Consumer Credit Licence fee does not need to tell them again.
Firms who neither register for interim permission nor inform the FCA that they intend to cease doing business will have their names published in a special list on the FCA website. Suspicion will inevitably fall on any firm which appears in this list that they may be conducting consumer credit business illegally, as it will be a criminal offence to carry out credit activities from April 1 without having the FCA’s authorisation to do so. Carrying out a financial services activity without authorisation can result in a fine and/or two years’ imprisonment.
The FCA has promised to take court action to close down and prosecute any firm who carries out credit business after April 1 without its authorisation.
Once firms have obtained interim permission, they will be informed of the procedure to be followed to gain full permission from the FCA, at a later date. For some firms, information on this procedure will be given as soon as May 2014.
Firms who are not licensed by the OFT on March 31, but who wish to carry out credit activities in the future, are not covered by the interim permission regime and need to follow the FCA’s process for obtaining new authorisation. This includes firms who made applications for credit licences in recent months, but for whom the OFT has not reached a decision on.