The Financial Conduct Authority (FCA) has issued a 45-minute video of a webinar about the forthcoming changes to consumer credit regulation. The panel comprised Nick Court (Consumer Credit Communications), Lesley Titcomb (Chief Operating Officer) and David Philpott (Consumer Credit Policy).
Mr Court began by saying that the FCA had held a number of roadshows to gauge opinion on its proposals for regulating the industry. The consultation regarding this closed in early December 2013.
Ms Titcomb said the FCA aimed to protect market integrity and provide consumer protection. She then said that maintaining these after the consumer credit regulation switchover in April 2013 would be a major challenge; given it will treble the number of firms regulated by the FCA. She urged firms to put customers first at all stages, from the initial affordability assessment to the collection of the debt.
She went on to explain that much of the FCA rulebook for consumer credit will be similar to the existing Office of Fair Trading (OFT) rules, but that additional requirements would be necessary in areas such as debt management and payday lending in order to protect customers. Next, she explained that key individuals from credit firms will require individual authorisation, and that the method of regulation may be different, even if many of the rules are not.
In the question and answer session, Ms Titcomb said that debt management and payday lending were amongst a series of activities that had been designated as higher risk by the Government, and that firms operating in these sectors should expect closer regulatory scrutiny. These firms will be the only ones who will need to have an approved person acting as compliance officer.
Payday lending took up a good portion of the webinar. It was re-iterated that firms cannot use continuous payment authority to collect loan repayments more than twice, but Mr Philpott invited firms who fear that this requirement may cause major issues to contact the FCA.
Mr Philpott clarified that retailers and other organisations who introduce customers to sources of credit should expect to be included in the new regulatory regime.
In response to a question about the standard of affordability assessment required, Ms Titcomb said the FCA would publish details of good and poor practice in this area in due course.
Firms for whom the OFT is still considering a licence application were advised that they would need to apply to the FCA as soon as they receive their OFT licence. It was emphasised that all firms will need to maintain their licences until the switchover date of April 1 2014.
Ms Titcomb said not all financial advisers require a consumer credit licence, or will require consumer credit authorisation come April, but did not give details of the circumstances in which these firms may or may not require a licence.
She said the FCA would prioritise applications for full permission from companies wishing to take on appointed representatives (ARs), in view of the fact that only companies with full permission will be able to act as principal firms. It was acknowledged that it may not be possible to take on ARs until late in 2014.
A series of dates will be published in due course explaining when firms of particular types can apply to upgrade their interim permission to full permission.
The FCA hopes to make the first rebate payments by the end of 2013. These are for firms who have already paid for indefinite consumer credit licences and who now need to pay for FCA authorisation. It was acknowledged that, for some firms, the cost of FCA authorisation may be significantly higher than under the OFT regime.
It was re-iterated that the final consumer credit rulebook was expected to be published in February 2014.
The webinar can be viewed at http://www.fca.org.uk/news/firms/fca-consumer-credit-webinar.