Consumer Credit Regulatory News

Compliancy Services Directors
Our Directors and Consultants share their insights and opinions on the important regulatory issues facing the UK Consumer Credit sector.

 

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Consumer Credit PS15/23 - feedback on CP15/6 and final rules and guidance
4th July 2017 - FCA

This Policy Statement includes the FCA’s responses to the feedback received to consultation CP15/6 Consumer Credit - proposed changes to our rules and guidance, published in February 2015 where the FCA proposed some relatively minor changes to rules and guidance in relation to credit brokers, lending (including guarantor lending), financial promotions and debt.

Having reviewed the feedback, the FCA are introducing the majority of the changes consulted on, but have made some modifications and are planning further work in some areas. Some of these changes came in to force on 28th September 2015 but most come in to force on 2nd November 2015. The policy statement also includes detail of further work the FCA are planning, including in relation to credit broking and guarantor lending.

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FCA Limitations of debt permissions
8th June 2017 - FCA Limitations of debt permissions

Limitations of debt permissions

On the 28th April 2017 the Financial Conduct Authority (FCA) announced some changes to the limitations on debt permissions.  These changes mean that many consumer credit businesses will have to apply for a change to their FCA permissions. This short article explains who will be affected and what those firms need to do. 

Explaining the changes

The changes announced by the FCA will affect firms that become involved in ‘Debt Management’.  This includes

  • Settling finance on trade in of a machinery
  • Rolling outstanding finance into a new finance arrangement on a machinery
  • Refinancing balloon payments at the end of a Personal Contract Purchase (PCP) agreement.
  • Early settlement of outstanding finance

This captures many consumer credit firms and, particularly, those that currently have ‘Full Permission’ and debt adjusting or debt counselling limited to ‘No Debt Management’.

The capital requirements for firms that are affected by the limitations issue also have a minimum capital requirement, as stated within CONC 10 of the FCA Handbook. Brokers will generally be subject to a £5,000 minimum prudential resources requirement.

Actions to be taken

We would recommend that firms consider their activities and review their FCA permissions:

  1. If you have Limited Permission and you are involved in any of the above activities then you should seek guidance to ensure the correct compliance framework is in place.
  2. Where you have ‘Full Permission’ you need to review your debt adjusting and debt counselling limitations. 
  3. Firms with ‘Full Permission’ and which require the debt adjusting or debt counselling limitations will need to identify an individual within the business who can be nominated as CF10 to take responsibility for compliance.
  4. Notify the FCA of these changes using their dedicated inbox (VOPLimitations@fca.org.uk).  You will not have to pay any fee for these changes.

Selecting your limitations

The FCA announcement on 28th April provided six new debt limitations within three specific sectors:

For firms involved in asset finance (e.g. broking of equipment)

  1. Debt Adjusting - Limited to the sale of goods
  2. Debt Counselling - Limited to the sale of goods

For firms involved in vehicle finance:

  1. Debt Adjusting - Limited to the settlement of vehicle finance
  2. Debt Counselling - Limited to the settlement of vehicle finance

 If you broker any loans not secured against any type of asset or vehicle.

  1. Debt adjusting - Limited to no debt management plans
  2. Debt Counselling - Limited to no debt management plans

Or as a combination of all six limitations

A full explanation of these limitations is provided on the FCA page (https://www.fca.org.uk/firms/limitations-debt-permissions).

Choosing your CF10

This is the control function for Compliance Oversight as described in SUP10A.7.8.  It has to be a director or senior manager who has adequate oversight of the compliance and conduct of the business and, where possible, is not conflicted in terms of dual responsibility.  An example of this would be having a Head Of Sales acting as CF10, this is a clear conflict as there is no independent oversight of the sales function. If different to your current CF1 a new approved person application is required.

Compliance Select

Additionally, Compliancy Services would like to remind you that if you already subscribe to our award-winning Compliance Select monitoring tool, assistance in resolving any affect these changes may have on our business is included as part of your subscription.

 

Need Advice?

If you believe you may be affected and require further advice, contact us using the form below and a member of our team will get in touch. Or alternatively call us on 01462 510022

 

 

New Standards of Lending Practice for business customers
28th March 2017 - Other

The Lending Standards Board (LSB) has published new standards of lending practices (SLPs) for business customers.

The SLPs replace the micro enterprise provisions of the Lending Code and are composed of nine main areas.

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Do you have FCA debt adjusting / debt counselling permissions?
20th March 2017 - Financial Conduct Authority

Please note: Limited Permission firms are not affected by this notice

Limitations on debt permissions

Are you are a full permission firm with the permission of debt adjusting and/or debt counselling with a ‘no debt management’ limitation?

If so you will need to review the limitations on your FCA permissions to ensure they appropriate for your business.

The FCA has issued a notice setting out that the ‘no debt management’ limitation is not appropriate for certain debt activities, so it is important to check and if necessary vary your permissions.

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Keeping up with the credit sector: the FCA’s view on the market today
3rd March 2017 - Financial Conduct Authority

In this news item we set out a number of points made by Jonathan Davidson in his speech to the Credit Summit in Lonon on the 30th March 2017 ‘Keeping up with the credit sector: the FCA’s view on the market today’ Note: this is a selection of the speech as drafted and may differ from delivered version..

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FCA updates consumer credit information sheets
19th October 2016 - Financial Conduct Authority

The FCA has updated the following consumer credit information sheets which firms are expected to use from the 18th January 2017. Until then, the current versions of the information sheets must be used:

Arrears (No.001) - Default (No.002) - High-cost short-term loans (No.003 ) - High-cost short-terms loans, peer-to-peer lenders (No.004) - Arrears, peer-to-peer lending (No.005).

The sheets are available in English and Welsh and can be printed in colour or mono.

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Remuneration in CRD IV firms: new guidance and changes to ‘Handbook’
28th September 2016 - Financial Conduct Authority

The FCA are consulting on proposals to help firms understand the rules that apply to their remuneration policies and practices, as the FCA bring some of their provisions in line with the European Banking Authority (EBA) Guidelines on sound remuneration policies (EBA Guidelines).

In addition, the FCA are proposing new non-’Handbook’ guidance designed to address some of the questions firms most frequently ask about how the FCA implement provisions under the EBA Guidelines, as well as more general provisions in the ‘Handbook’.

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EBA publishes final guidelines on the remuneration of sales staff
28th September 2016 - European Banking Authority

The guidelines apply to remuneration paid to staff employed by credit institutions, creditors, credit intermediaries, payment institutions and electronic money institutions

The guidelines are aimed at providing a framework for financial institutions to implement remuneration policies and practices that will improve links between incentives and the fair treatment of consumers and reduce the risk of mis-selling and resultant conduct costs for firms.

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Can we predict which consumer credit users will suffer financial distress?
3rd August 2016 - Financial Conduct Authority

People suffer financial distress when they face financial and non-financial difficulties from repaying their outstanding debts. This paper analyses the prevalence of financial distress, how this distress is related to consumer credit use, and whether financial distress can be predicted.

FCA rules require consumer credit lenders to assess the creditworthiness of loan applicants and the FCA is considering whether changes are needed to existing rules and guidance.This Occasional Paper is intended to inform discussion ahead of a future consultation paper on this topic.

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Responsibilities when accepting business from unauthorised introducers or lead generators
2nd August 2016 - Financial Conduct Authority

This alert, taken from the FCA website, is aimed at Investment advisers’ and authorised firms’ responsibilities when accepting business from unauthorised introducers or lead generators

It highlights some of the risks arising from authorised firms accepting business from unauthorised introducers/lead generators and/or other authorised firms (the ‘introducer’) and although directed at investment firms the overall message can apply to any firms that have introducers in any sector.

The messages the FCA wish to communicate come largley under the following groupings:

  • Areas of concern identified and warning signs
  • Regulatory requirements and what you should do next
  • Matters to be aware of

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Consumer credit: Response to the CMA recommendations on high-cost short-term credit
26th May 2016 - Financial Conduct Authority

In February 2015, the Competition and Markets Authority (CMA) published a final report on its market investigation into payday lending. This contained a package of remedies, some of which were to be implemented by the CMA, while others were recommendations to the FCA.

In this policy statement, the FCA set out their response to the feedback received to Consultation Paper (CP)15/33 Consumer credit: proposals in response to the CMA’s recommendations on high-cost short-term credit (October 2015) and publish final rules for price comparison websites (PCWs) comparing high-cost short-term credit (HCSTC) products.

There are also a number of issues in the FCA document relating to ongoing and future work undertaken or to be undertaken by the FCA. We have summarised these towards the end of this regulatory update.

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Guidance on Small and Medium Sized Business (Credit Information) Regulations
8th April 2016 - FCA

The Small Business, Enterprise and Employment Act 2015 ‘the Act’ contains measures aimed at improving access to credit information about small and medium sized business (SMEs).

In June 2015 the FCA consulted on guidance explaining the scope of ‘the Act’ which requires the FCA to monitor and enforce relevant requirements.The purpose of the guidance is to explain the scope of FCA functions in relation to Regulations.

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Call for Input: Review of retained provisions of the Consumer Credit Act
18th February 2016 - FCA

The FCA is conductng a review to simplify the CCA regime wherever possible, ensuring appropriate consumer protection whilst not overburdening firms. The review will take into account whether or not the provisions should remain as they are, be modified or updated.



 

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