Consumer Credit Applications – Key FCA Messages

Following a meeting with the Association of Professional Compliance Consultants (APCC), of which ATEB is a founding member, the FCA has provided some key messages from the initial tranche of Consumer Credit applications.

  • Start Early. This message has been reiterated time and time again, and the FCA’s experience is that firms do not realise how much work is involved; 
  • Fit and Proper Disclosures. Nearly all refusal decisions to date have been based on non-disclosure; 
  • Authorisation is just a step on the way to being supervised. Firms are reminded that the nature of FCA supervision is a key differentiator between the FCA regime and the OFT; 
  • Many firms do not know whether they need Limited or Full Permissions and are not clear about the Debt Permissions required. Typically 25% of firms change their permissions after submission and 18% of applicants are “confidently wrong.” The FCA is surprised by the number of firms that do not know the difference between lending and broking. To help firms clarify if they need ‘Full’ or ‘Limited’ permissions the Credit Ready Decision Tool can be downloaded here;
  • Consumer Credit income is often stated inaccurately. This includes income paid by brokers to lenders even when the broker does not make any profit themselves from credit activities. Please follow the link to access ‘how to calculate consumer credit income’ here;
  • The RBP (Regulatory Business Plan) should be proportionate to the business at hand. In particular, ancillary non-financial services do not need to be extensively written about;
  • Financial Promotions for Consumer Credit firms continues to be a concern. There have been examples of financial promotions referring to lawyers that did not exist. It is unacceptable to mislead customers; 
  • Affordability assessments are not dissimilar to those carried out in the mortgage industry, but are not the same. Generally, this is an area which needs greater work by firms who should note that it is not sufficient to assess if people have the ability to repay; they must assess if they can do so on a sustainable basis?

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Start your journey to the FCA on the right foot and get it right first time.

The FCA will ask questions about your application, but by getting the core information right it will create a good impression and ease the process.

Action Required By You

  • Start early and familiarise yourself with the process;
  • Don’t miss your application period:
  • Don’t rush the application at the last minute;
  • Ensure you answer all of the firm specific questions clearly. In our experience firms do not always do so and this creates additional work for the FCA and requests for further information;
  • Experience counts so get ATEB involved to help with your application. Contact ATEB here or call your consultant to help with your application.    
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About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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