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October 2014
Consumer credit Keep your customers close and your regulator closer
• Transition to FCA regulation:
Getting your organisation ready
Prem Griffith
• The Consumer Credit Act and the FCA
Richard Ellison
• Trade association’s viewpoint
Greg Stevens
Welcome
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A new regime
• FCA took over from OFT on 1 April 2014
A new approach
• OFT licenced, FCA regulates
A proactive regulator
• greater focus on ‘consumer outcomes’
• swifter / more severe action where firms are
not treating customers fairly
Personal liability
• focus on firms’ and individuals responsibility
FCA focus on consumer credit
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WARNING FOR ROGUE PAYDAY LOAN FIRMS
Consumer credit is on the front page
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Lining up your landing slot – interim permission
If you were OFT licenced at 1 April you:
• were given FCA interim permission
• can only undertake the activities you were
licenced to perform at 1 April 2014
• will be given a ‘landing slot’ to submit full
application for authorisation
• Supervision is minimal during the interim
stage
Landing slots run until early 2016
• generally speaking, the FCA is prioritising
the more ‘risky’ firms
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Getting authorised
An application not a registration
• understand the relevant rules (FCA handbook and CONC)
• expect to be challenged by the FCA case officer
• include a regulatory business plan
• process likely to take 3-6 months.
Interim
permission
New
entrants
Limited
permission
Full
permission
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What to look out for
Treating customers fairly
• Embedding TCF in your culture
• Being able to demonstrate to FCA
Managing customer-facing elements
• Putting adequate policies and
procedures in place
Embedding compliance
• Testing and ensuring policies and
procedures are followed and
refreshed
The bad news
…and are hungry
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The FCA has teeth...
The good news
• have clearly documented business
model and procedures
• have robust governance across all
areas of the business
• have an effective controls framework
• can demonstrate that you are putting
your customers needs and interests at
the heart of the business
• are trying to do the right thing
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The FCA is reasonable…
You have nothing to fear from
the FCA if you:
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Start planning early
Review CONC
• How does it apply to your business model?
Draft a regulatory business plan
• It’s more than just form filling – you will need a regulatory business plan and
potentially policies and procedures to cover operational aspects of business
Show you care
• Think about how to demonstrate you are putting the customer at the heart of
everything you do (even to the extent it conflicts with profitability)
• Especially important if operating in a sector where customers may be
disadvantaged / have low level of financial awareness
Be prepared
• The regulator may ask difficult questions
• But remember if demonstrate that you’re trying to do the right thing,
the FCA will work with you
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If you’re stuck
• Preparing for regulatory change
• Getting authorised
• Developing your compliance framework
• Ensuring you remain compliant
• Training and coaching for all staff
www.bovill.com
Bovill can help you with:
www.bovill.com
Making a positive difference
THE CONSUMER CREDIT ACT
• Is the CCA still alive and kicking?
• The Consumer Credit Sourcebook (CONC)
• Rules and Guidance
• Review of retained CCA provisions by 2019
THE NEW REGULATOR
• OFT/FCA: A new broom with teeth
• The 11 Principles for Businesses (don’t forget PRIN 11)
• Threshold Conditions
• Your interim permission: Is this fit for purpose?
LEGAL IMPLICATIONS
• Approved Persons: Can they perform their new role? What happens if they don’t?
• IT and data security
• CONC (including CONC 7)
• Skilled Persons: s.166 FSMA
CONSEQUENCES OF NON-
COMPLIANCE
• Legal: No licence?
• Legal: Defective documentation/procedures
• Regulatory: Fines, industry exclusion, criminal prosecution
• Regulatory: You can lose your licence
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SGH Martineau LLP is a Limited Liability Partnership registered in England and Wales
Copyright SGH Martineau 2014
FCA Landscape
* Behavioural Economics & Insights
* Consumer Centric
* CONC Rules & Principles
* Proactive v Reactive
The Numbers Game
* 90,000 + CCL’s
* 49,500 Interim Permissions
* 20,000 Authorised Firms 2018 ?
Salami Slicing – Diversity & Complexity
* Pick n’Mix
* Simple v complex
* Innovation & creativity
Consumer Choice v Needs & Aspirations
* MMR
* Insurance Industry experience
* Proportionate & appropriate
* European agenda
* Consumer genie
* The future landscape
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October 2014
Questions
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