In April 2014 regulation of consumer credit will be transferred from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) to create a ?tougher and more pro-active? regulatory regime. The FCA will be granted greater powers to investigate and scrutinise, and will have a wider range of sanctions and penalties to impose. It is important for Registered Social Landlords (RSLs) to be aware of the changes in consumer credit regulation for housing associations?.
What do you need to know?
Many housing associations and subsidiaries hold Consumer Credit Licences in order to carry out regulated consumer credit activities e.g. debt adjusting, debt counselling and credit information services. It is important for Registered Social Landlords to identify the credit activities which they carry out to ensure that they hold the correct licences. Below is a brief overview of the category licences to assist housing associations in deciding which categories to apply for:
- Category A ? Consumer credit e.g. time to pay arrangements and direct provision of credit;
- Category B ? Consumer hire e.g. leasing of furniture/white goods if not encompassed in the tenancy;
- Category C ? Credit brokerage e.g. shared equity;
- Category D ? Debt adjusting e.g. negotiating discharge of debt under a credit agreement;
- Category E ? Debt advice/counselling e.g. advising on the best way to discharge a credit under an agreement;
- Category F ? Debt recovery e.g. collecting debts under agreements owed to others;
- Category G ? Debt administration e.g. performing duties, or enforcing rights, under an agreement on behalf of a creditor or owner; and
- Category H ? Credit information services e.g. checking or amending an individual?s credit details for their benefit.
How should you prepare for the new regime?
RSLs who currently hold an OFT licence and who wish to continue to carry out consumer credit activities after 1 April 2014, must register for ?interim permission?. To obtain interim permission RSLs must register with the FCA and pay a fee of ?350 or ?245 if applying for registration before 30 November 2013. RSLs who do not register by 31 March 2014 will no longer be able to legally continue with consumer credit regulated activities. If RSLS don?t apply for interim permission and wish to continue consumer credit regulated activities they must apply for full registration under the new regime, at a cost of between ?1,000 and ?15,000 depending on the complexity of the application.
If you would like further information on consumer credit regulation for housing associations, please contact our experienced team who will be happy to help.