Changes to consumer credit

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Posted in:Banking and Finance, Corporate and Commercial|July 24, 2013 | Join the mailing list

Firms offering credit to consumers are currently licensed and regulated by the Office of Fair Trading. On 15 July 2013 the Financial Conduct Authority (the FCA) confirmed that firms would need to begin the process of transferring from the OFT to the FCA
in September 2013 and that the FCA would take over their regulation.

Firms who are regulated include businesses providing loans, overdrafts, debt collection, credit intermediaries and debt advisers. All those affected will need to consider the impact of the transfer as the FCA is a more proactive regulator.

It is expected that the FCA will be more proactive as a regulator than the OFT, with powers to tackle consumer detriment it is predicted that they will be tougher in their dealings with regulated firms.

Powers awarded to the FCA include a new product intervention power, which will enable the FCA to ban or impose requirements on financial products and aims to prevent consumer detriment.

OFT licences will expire on 31 March 2014 and firms will only be eligible to carry on activities for which they have a current OFT licence on 1 April 2014 following the FCA notification. On 1 April 2014, firms which currently hold licences with the OFT will
transfer to the FCA regime. By this time regulated firms will need to:

• request a log-in from the FCA website using their OFT licence number and email address;
• check the information listed about the firm on the OFT register; and
• validate or update the OFT’s information on the firm’s contact details and controllers and a list of the consumer credit activities
that the firm is currently licensed to undertake.

The FCA may also ask firms for other types of information on a voluntary basis, such as turnover, complaints information, number and location of branches and transaction information.

Firms can register their intention to carry on providing consumer credit activities online from September 2013 and will be charged a fee, currently proposed at £150 for sole traders and £350 for most other firms.

If you are concerned by the developments mentioned above, or are facing your own issues in relation to consumer credit regulation then please contact
Stephen Foster, Head of Corporate and Commercial at stephenf@berg.co.uk  or by telephoning 0161 833 9211.

shared By Sarah Wilde

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