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?