Effect of FCA (CONC) Rules from 1st October 2014
The fanfare which surrounded the launch of the FCA into the world of Consumer Credit last April has now died down. Many businesses that transitioned over via the Interim Permissions system thought that was easy and now they seem to think that they need do nothing until they go forward for authorisation in their “landing slot”.
This is obviously not the case. From the 1st of April 2014 there have been new requirements for all Consumer Credit businesses. These include the Principals of Business (PRIN) and therefore place the burden of Treating Customers Fairly as vital to any Consumer Credit business and the duty of proof has been in place since 1st April. There was one specific change that was added from the 1st April which was the health warnings had to be placed on adverts for high cost short term lenders.
The next raft of changes that had an implementation date was the rules regarding High Cost Short Term Lenders was in July 2014 when they had to implement changes to numbers of rollovers and CPA attempts on collections.
The biggest number of changes came in on 1st October 2014, at the end of the 6 month transitional provisions period. As was stated during the consultation period, the FCA have taken all the guidance that had been issued by the OFT and that was not something that HAD to be implemented and made most of them into rules. This means that from 1st October these have to be in place for any business operation in the Consumer Credit marketplace. An example of that would be the concepts of Irresponsible Lending which were originally described by the OFT in “Irresponsible lending: OFT guidance for creditors” (OFT1107). This is now incorporated into the Consumer Credit Sourcebook (CONC) and now MUST be applied from 1st October 2014.
On top of this there are also rules that are totally new to the Consumer Credit market. One example of this is the location rules. The need to have the “Mind and Management” of the business in the UK is new to the FCA and given the transitional rules means that this will need to be in place from 1st October 2014.
The transitional period was there to enable Consumer Credit businesses to take the time to make the relevant changes and get them right. That time has now run out! It is important that from 1st October everything that is required by the FCA is in place. The consequences of not doing this could still be felt when applying for full authorisation and the FCA may then look at when the changes were put in place and maybe delays in doing this could be seen as a reason to refuse authorisation.
For assistance with any issues around FCA issues or authorisation please contact us.