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Compliance Advice for

Consumer Credit Firms

Compliance Advice for Consumer Credit Firms

Compliance Advice UK | Consumer Credit Firms

The Financial Conduct Authority (FCA) is the UK’s financial regulator. It took over the regulation of the consumer credit market from the Office of Fair Trading (PFT) on 1 April 2014.

Most consumer credit business is now regulated by the FCA including:

  • Selling goods or services on credit, including hire purchase

  • Hiring or leasing out goods for more than 3 months

  • Lending money

  • Issuing credit cards

  • Arranging credit for other people (“credit broking”)

  • Collecting or purchasing consumer credit debts

  • Helping people with debt problems

  • Advising on people’s credit standing

If your business is carrying out any of these credit activities for consumers it will need to be regulated. Business to business lending is normally unregulated, however, if credit is offered to:

  • Sole traders; or,

  • A partnership with fewer than 4 partners; or,

  • An unincorporated business

  • Then it’s likely you’ll need to be regulated.

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Compliance Advice for Consumer Credit

The regulation of the credit industry is governed by the Regulated Activities Order (RAO) and the Financial Services and Markets Act (FSMA). It can be quite a complex area so it’s very important to seek legal and compliance advice prior to undertaking any activities that may be regulated. There are serious consequences for getting it wrong.

The types of consumer credit firms that require FCA authorisation include:

  • Banks and building societies

  • Other credit card and overdraft providers such as challenger banks

  • Motor finance providers

  • High cost short term credit providers, so called “payday” lenders

  • Buy-now-pay-later providers

  • Rent-to-own providers

  • Pawnbrokers

  • Retail finance lenders

  • Debt management companies

  • Credit brokers

  • Debt collection agencies

  • Credit reference agencies

  • Credit information services

  • Peer to peer lending

Whatever your Consumer Credit requirements complianceadvice.co.uk can help.

Some credit activities only require limited permission. These include:

  • Consumer hire (e.g. tool and car hire)

  • Credit broking where the goods or services being sold are the main business and broking is a secondary activity which is designed to fund the purchase of those goods or services. This might include some high street retailers that introduce their customers to a finance provider. This does not include domestic premises suppliers

  • Credit broking for consumer hire or hire purchase agreements

  • Certain loans granted by local authorities that are within the scope of the Consumer Credit Directive

  • Not for profit bodies providing debt counselling or debt adjusting

  • Lending where the sale of the goods / services is the main business and there is not interest / charges and the agreements are not hire-purchase or conditional sale agreements. So, this might be, for example, gyms or golf clubs which allow deferred payment for membership

 

Limited permission firms have a less intrusive application process than full permission firms and a lighter touch approach to regulation. However, they are still subject to the FCA’s regulatory regime and the rules contained within its Handbook.

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Whatever your consumer credit firm type, contact complianceadvice.co.uk for advice, guidance and solutions today.

We can help with all your FCA consumer credit requirements.

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