The Financial Conduct Authority (FCA) has acted to ban a consumer credit firm from entering into any new regulated credit agreements, and from engaging in credit broking activities.

The South West England based firm is a distributor of vacuum cleaners and is therefore one of the many thousands of firms who required FCA authorisation for consumer credit even though financial services was not their main business activity.

The firm cannot now lawfully offer regulated credit agreements to finance the purchase of vacuum cleaners, although it is entitled to appeal the ruling to the Upper Tribunal (Tax and Chancery Chamber).

The reasons for the regulator’s action include:

  • The firm sold credit agreements during cold call visits to customers’ homes even though its permissions prevented it from soliciting business in this manner
  • The firm did not carry out adequate affordability checks on customers’ ability to repay credit. In at least two cases, the firm went as far as to enter into a consumer credit agreement even though the customers had told the firm that they could not afford the credit
  • The firm misled the FCA
  • The firm is closely connected with another firm whose consumer credit licence was revoked by the Office of Fair Trading under the previous regulatory regime

The second of these is one of the fundamental requirements of any firm that offers any form of credit agreement – no customer should be granted credit without a rigorous check being carried out as to whether they are likely to be able to afford the repayments. The third point in this list directly refers to one of the FCA’s 11 high-level Principles for Business – all authorised firms must be open and co-operative with the FCA and other authorities.

The FCA has advised customers who have existing contracts with the firm to consider getting legal advice from a solicitor, legal advice centre or Citizens Advice Bureau.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article