20Jul

In June 2015, the Financial Conduct Authority (FCA) issued a Data Bulletin explaining the progress the regulator had made to date in authorising around 50,000 consumer credit firms.

As of March 31 2015, some 19,533 firms had applied for authorisation. This figure was made up of 12,641 firms who wished to upgrade their interim permission to either full or limited permission; 6,122 firms who were applying for credit authorisation for the first time; and 770 organisations who had been ‘grandfathered’ into the new regime (i.e. they were not-for-profit firms who were previously covered by a group Consumer Credit Licence).

77% of holders of interim permission made an application within their allocated three month period. The remaining 23% either cancelled their interim permission during the allocated period, or saw it lapse at the end of the three months. Reasons for this might include: the firm deciding to become an appointed representative of an existing regulated firm, the firm deciding to exit the credit market, the firm being covered by an exception to the authorisation requirements, or a group of firms deciding to reduce the number of regulated entities within the group.

Only 18 firms have seen their applications refused. 775 firms initially made an application but then withdrew it. However, over 90% of applicant firms applying within each authorisation period ended up becoming authorised.

To date, the FCA has taken an average of eight weeks to reach a decision on a limited permission application, 11 weeks for a variation of permission application (one from a firm already authorised by the FCA for other activities that is now seeking to add credit permissions) and 20 weeks for a full permission application. The regulator expects these processing times to increase in the foreseeable future, as it will still be processing some of the more complex applications from earlier application periods, whilst also needing to work on the newer applications.

As of March 31 2015 there were 10,286 fully authorised consumer credit firms, of which 3,989 were new entrants. A further 36,569 still held an interim permission at that time.

Most of the firms authorised so far are limited permission credit brokers, with full permission credit brokers being the second highest figure. Small numbers of credit repair, consumer hire and debt collection firms have also been authorised so far.

All consumer credit firms who are yet to submit their authorisation application need to make sure they know when their allocated application period is. They also need to ensure that they are totally clear as to whether they can apply for limited permission, or whether full permission will be required. An important consideration here is to carefully study the specific criteria lenders and brokers must meet in order to qualify for limited permission.

Then firms need to ensure they start preparing the required financial and non-financial information well in advance of the time they need to apply.

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.