The Financial Conduct Authority (FCA) has issued a statement explaining which firms can expect to receive a rebate on their consumer credit authorisation fees, and outlining some of the processes to be used to pay the rebates. However, there is still no information available about the likely size of the rebate. It is the Government that will make the decisions on the terms of the rebate scheme, while the FCA will simply administer it.
The need for rebates exists because all consumer credit firms are expected to pay the necessary fee to become authorised by the FCA when it takes over as regulator of the credit sector from April 2014. However, firms have already paid for consumer credit licences (CCLs) from the Office of Fair Trading (OFT), raising the prospect of effectively needing to pay twice.
Generally speaking, firms who have paid a licensing and/or maintenance fee to the OFT in the five years prior to April 1 2014 will be eligible for a rebate. However, exceptions to this will include:
- The 50 leading payday lenders, who were all ordered by the OFT, following their compliance review, to make urgent changes to their practices and procedures. It is the Government’s decision to exclude these firms from the rebate scheme.
- Any firm for whom the rebate would be less than £10
- Any firm who has been informed that the OFT is minded to revoke their licence, suspend their licence or refuse their application. In the event that a firm successfully appeals against such a decision, they would become eligible for the rebate once the appeal process has completed, assuming of course they meet the other criteria.
Firms expecting to receive rebates must ensure that they hold a CCL right up until April 1 2014. The only exception to this is firms who have relinquished their licence, by giving notice to the OFT, since April 23 2012. It is actually not necessary to seek FCA authorisation in order to receive a rebate, so some firms who are proposing to exit the industry will also be eligible for rebates.
The FCA has said that a key criterion in calculating the size of the rebate will be the time between April 1 2014 and the next occasion on which the firm would have either renewed its licence or paid the next maintenance payment, had the OFT licensing system remained in force.
Firms affected can expect to receive an email from the FCA about the subject of rebates ‘in the coming weeks’. The regulator will write to firms in 2014 where it does not hold an up to date email address.
Those firms that have completed the interim permission registration process will receive their rebates automatically, via a cheque in the post. Such firms are urged to check that their contact details are correct on the FCA’s registration system.
Firms that have not completed the interim permission process may need to apply via the FCA’s website to receive it. This facility will go live in January 2014. Firms in this situation are asked to carefully read the FCA’s email or letter when it arrives for further information.