Consumer credit update: FCA issues final proposed rules for consumer credit firms

Last week the FCA issued Policy Statement PS15/23: Consumer credit - feedback on CP15/6 and final rules and guidance. The document outlines the changes that will take place in respect of consumer credit rules and guidance.

Some of the rule changes have already come into effect, following the Policy Statement which was issued on 28 September 2015, and the remaining changes will become effective from 2 November 2015. 

What are the key changes and what could they mean to your business?
 

Financial promotions - high cost short term credit   

Amongst other changes, the FCA has removed the exemption that previously existed and going forward all promotions for this type of credit will need to carry a risk warning.  

Credit broking   

New FCA rules ban premium rate calls following entry into a contract for the provision of credit broking services. However, most proposed rule changes in this area will be given further consultation by the FCA.  

Lending  

Changes will be introduced into the treatment of guarantors involved in the lending process so that they are treated as customers alongside the main applicant. These changes will specifically apply to firms dealing with areas such as pre-contract explanations and creditworthiness assessments.  

Debt - use of continuous payment authority (CPA)  

Under this topic, a number of existing rules were consulted upon and one of the most significant changes is that the FCA will proceed with rules which mean that where a firm is offering forbearance in respect of a debt, CPA can be introduced without modifying a credit agreement, even if CPA was not included in the original credit agreement.


If you do not know the existing rules and how they impact upon your firm, then now is the ideal time to speak to understand what will be required under the rule changes.

The Moore Stephens regulatory consultancy team can provide expert consumer credit advice. Our services range from completing FCA applications to helping you to meet initial regulatory expectations and providing retained regulatory services to enable you to comply with ongoing regulatory requirements.

For more information on this topic please contact Kelly Sheppard.