In our last bulletin The Proposed FCA Framework: An Overview, we looked at the structure and overall look of the new regulatory regime that will apply to consumer credit. It is intended that regime will apply from 1 April 2014. The FSA acknowledges in its consultation document CP13/7: CONSUMER CREDIT (“the
Consultation”) that this timetable is challenging. It has therefore proposed some transitional arrangements. What are these and what will this mean?
Smoothing the Transition
Smoothing the transition is a sub-heading included in the Consultation. Whether it will be smooth remains to be seen, but the FSA has suggested an “interim permission” transitional stage for firms to adopt until they become “fully authorised”, which they must do by no later than 1 April 2016. We will look at the requirements for authorisation in our bulletin to be published on 9 April 2013.
On 31 March 2014 consumer credit licences issued by the OFT will lapse. If consumer credit businesses want to continue their regulated activities after 31 March 2014, they must notify the FCA well in advance of this that they wish to obtain interim permission and they will have to pay a fee. Interim permissions will begin from 1 April 2014 and will cover the activities included in the existing OFT credit licence, provided that licence is valid and has not been suspended. Firms will not have to
have key individuals approved by the FCA in order to obtain an interim permission.
Interim Variation of Permission
Some firms may already be regulated by the FCA or Prudential Regulation Authority (PRA) and have an existing OFT consumer credit licence. Those firms will have to notify the FCA and pay a fee, in order to obtain what will be called an “interim variation of permission”.
As a result of the interim permissions regime, firms will have time to consider the next step under the FCA, which will be to apply for and obtain full authorisation, or such permissions as are required in order for them to continue in their consumer credit business after 1 April 2016.
In our next bulletin to be published on 2 April 2013, we’ll be looking in more detail at the interim permissions regime the FCA intends to use in order to manage the transition from the OFT and what this will mean for firms.