Update on consumer credit Jenny Driscoll and David Blocksidge 1
Update April 2014 – We took over regulation of firms offering credit, loans and debt services Action we have taken, so far • Carrying out a smooth transition • 2
Progress since taking over regulation Published rules • Published new research • Firms action • Price cap consultation • Thematic reviews • Announced credit card market study • 3
Reminding firms of our expectations FCA people speak regularly at events • throughout the country Events, including roadshows and • webinars Supervision Division • Robust application process • 4
The journey for firms OFT regulation FCA interim permission FCA application FCA authorisation 5
A smooth transition • We will invite around 50,000 firms to apply for authorisation • Three month application periods began on 1 October 6
A smooth transition • Firms have been informed when to apply • We are helping firms prepare 7
Ensuring a level-playing field • All authorised firms will appear on our register • Our enforcement team will seek out firms that carry on credit business without permission 8
What’s coming up Price cap consultation • Credit card market study • Consultation paper • Cap comes into force – 2 January 2015 • Publish thematic review reports • 9
The debt management sector Key areas that we will look at in the debt management sector include: • fees and charges • use of third parties, such as lead generators • the provision of suitable, affordable and sustainable debt management solutions • financial incentives for staff • Competence • Protection of client money 10
The high-cost short-term sector Key areas that we will look at in the high- cost short-term credit sector include: • Default rates • Rollovers and re-lending rates • Evidence of carrying out effective affordability checks • How companies treat customers who have difficulty in repaying 11
Our approach Gateway is key FCA Flexible for High different minimum approach size firms standards Getting inside the business 12
More on our approach • Limited and full permission • Application periods • Approved persons • Controllers • Supervision 13
Not for profit firms • ‘Grandfathering’ - Not For Profit bodies who were members of a group licence, such as AdviceUK’s (and had opted in), immediately before 1 st April 2014 are to be treated for all purposes as having Authorisation to carry on – Debt adjusting – Debt-counselling – Providing credit information services 14
New applicants - information to be supplied at application • Threshold Conditions that will apply to new entrant NFPs – Location of Offices – Effective Supervision – Appropriate Resources – Suitability • FCA Contact Centre for queries – 0845 606 9966 15
Ongoing requirements • NFPs will need to show that they remain compliant with threshold conditions; and • Reporting requirements 16
Any questions? 17
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