The consumer credit market is currently overseen by the Office for Fair Trading but responsibility will pass to the new regulator the FCA by 1 April 2014.
The FSA has published a consultation today setting out the FCA’s approach to consumer credit regulation.
It set out that the new regime will focus on higher risk firms, such as payday lenders, pawnbrokers, credit reference agencies and debt collection.
Lower risk firms will be subject to less onerous standards and will pay lower fees. These firms include not-for-profit debt counselling, businesses that provide lending as a side activity, and credit broking, such as where retailers and motor dealers introduce customers to lenders.
The transfer of consumer credit regulation from the OFT to the FCA will be phased in over two years. An interim period will begin in April 2014 with full implementation by April 2016.
From autumn 2013, existing OFT licence holders can apply for interim permission so they can continue to operate. They will have to provide limited information and pay a one-off fee.
Existing OFT licences will lapse on 31 March 2014 and FCA interim permissions will begin from 1 April 2014. Firms will need to be fully authorised by April 2016.
FCA chief executive designate Martin Wheatley says: “We will focus our efforts on the areas of highest risk, and ensure we use our resources sensibly and proportionately.
“The work we have done with consumer groups and trade bodies has helped us reach this point and will continue to help us make the transition as smooth as possible.”
Advisers need to hold a consumer credit licence if they spread their adviser charge over more than four instalments. Many advisers are also likely to hold a consumer credit licence if they advise on mortgages or provide debt advice