Susan de Mont, acting director of credit authorisations at the regulator, the Financial Conduct Authority (FCA), wrote an article in Money Marketing magazine in early September 2014 entitled “Getting ready for consumer credit authorisation”.
All consumer credit firms have required FCA authorisation in some shape or form since April 1 2014, but most firms have yet to apply to upgrade their existing interim permission to either limited permission or full authorisation.
Ms de Mont began by stating that the FCA was a tougher regulator than the previous credit regulator, the Office of Fair Trading.
Next she highlighted that some 50,000 credit firms came under the FCA’s jurisdiction on April 1, and that contrary to some reports, the changes affected much more than just payday lenders and debt managers. Firms ranging from debt counsellors to credit reference agencies and second charge mortgage lenders are amongst those the FCA now supervises.
One important issue highlighted is that firms whose main business is in another area of financial services may also require consumer credit permissions. For example, mortgage brokers may also transact other forms of loan; and investment advisers may be deemed to be carrying out debt counselling if they advise a client to pay off a specific loan with part of their capital. Existing FCA-regulated firms are not covered by the interim permission regime, and any firm who thinks they need to add consumer credit to their existing permissions is advised to make a Variation of Permission application as soon as possible.
Having earlier highlighted that the FCA was a stricter regulator, Ms de Mont then states that the application process is also more rigorous. “This process is deliberately more detailed than OFT licensing used to be and will result in some firms failing to secure authorisation. But we believe it will help establish a minimum standard across the industry, which is in everyone’s best interest,” wrote Ms De Mont.
All firms that currently hold interim permission have been allocated a specific three-month window during which they must apply to upgrade to either limited permission or full authorisation. Any firm that fails to apply during their allocated application period will lose their authorisation.
When this three month period commences depends on the type of business the firm carries out, and in some cases, on their postcode as well. For commercial debt adjusters and home finance firm intermediaries, the application period commences as early as October 1 2014 (i.e. these firms must apply by the end of 2014), and the process will be complete for all firms by March 31 2016. Details of when these application periods are can be found at: http://www.fca.org.uk/static/fca/article-type/application-periods-direction-to-firms.pdf
Firms intending to act as a principal to one or more appointed representatives can apply to the FCA to have their application period brought forward.
The key things for firms to consider at present are:
- When their application period is, ensuring that they do not miss their deadline
- Whether they will need limited permission or full authorisation. Higher risk firms will require full authorisation, and more details are at: http://www.fca.org.uk/your-fca/documents/credit-ready-decision-tool
- The information and documentation they need to prepare for an application, see: http://www.fca.org.uk/your-fca/documents/credit-ready-limited-permission-checklist or http://www.fca.org.uk/your-fca/documents/credit-ready-full-permission-checklist
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.