Consumer Credit Update
Consumer Credit timeline 1 st April applied for interim permissions 1 st May FCA will write to firms giving them a 3mth window for full applications Firms will be able to apply to vary their permissions and use the FCA connect service to do so No further applications will be allowed after 31 st March 2016
Consumer Credit application window By 1 st May firms will receive written confirmation of their application window ↓ Category Sub- Region Region Region Region of category Group 1 Group 2 Group 3 Group 4 business of North London & Scotland, Central International business NI, South and East From 1 st From 1 st From 1 st From 1 st Credit Broker Brokerage (FCA Oct 2014 Oct 2014 November November authorised but before but before but before but before 1 st January 1 st January as Home 1 st 1 st Finance 2015 2015 February February Firm ) 2015 2015
Do I need a consumer credit licence? Only transacts regulated Mortgages/investments under FCA Do not allow clients time to pay for services . Do not refer clients to 3 rd parties for consumer credit activities including debt counselling, adjusting etc. or 2 nd charge lending Only advise clients to consolidate their unsecured debts into a specific regulated mortgage contract Do not advise on BTL mortgages These firms are unlikely to need a consumer credit licence
Do I need a consumer credit licence? All other firms who advise on regulated mortgages/BTL/Investments etc. Refer clients to 2 nd charge packagers or credit brokers Refer clients to debt management firms where the firm only offers one debt management solution. (19 examples in PERG) Allow clients to pay any fees due to them for services via monthly instalments or a regular on-going maintenance fee Referring clients for unsecured or credit card finance Carry out BTL mortgage business These firms are very likely to need a consumer credit licence and may have already applied for interim permissions
What type of permissions under Consumer credit do I need Limited permission activities These firms present a reduced risk to the FCA, lower fees and shorter application process. Examples are; Consumer hire (tool/Car hire), credit broking where this is a secondary activity Motor dealership, retailers introducing clients to a finance provider . Full permissions activities These firms are likely to be the majority of Mortgage brokers examples are; credit broking where introducing clients to Lenders is a main business activity, debt administration, counselling, adjusting or collection Decision tool on the FCA website http://www.fca.org.uk/firms/firm-types/consumer-credit/authorisation/prepare
What is it going to cost me? Based on Firms estimated income from Consumer credit activities:- £300 -£2500 Do Not include income from regulated mortgage contracts
What Next? Paradigm are going to update website with a Consumer Credit page “how to plan and prepare for consumer credit regulation” Paradigm Technical Helpdesk have already sent out a number of communications Paradigm will offer further bulletins and support updates on Consumer credit Visit www.paradigmmortgages.com and click on Consumer credit or ring Christine to discuss further
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