Since taking over the regulation of consumer credit in 2014 the FCA has identified a number of different areas of work which it would like to take forward. These include areas where it has identified actual or potential consumer detriment, such as in relation to credit cards and debt management, as well as work which needs to be undertaken to replicate some of the original CCA provisions which remain in force.
Retained provisions of the Consumer Credit Act:
As part of the transfer of regulation, Parliament repealed some provisions of the Consumer Credit Act 1974 and some of these were replaced by FCA rules. The FCA was required to undertake a review in relation to the remaining CCA provisions and to report on this to the Treasury by 1 April 2019, including any recommendations for change. To effect this, the FCA published a Call for Input in February 2016 which sought initial views from stakeholders on a number of key aspects, in particular:
- Whether they should prioritise any particular provisions for review;
- The timescales for the review and whether any particular provisions should be considered earlier; and
- The conduct of the review, including engagement with stakeholders.
This Call for Input has now closed. The FCA intends to publish an update on its progress by the fourth quarter of 2016.
Review of the High Cost Short Term Credit price cap
Open for comment to 15 February 2017, the Call for Input forms part of the FCA’s work to review the HCSTC price cap that came into force in January 2015, looking specifically at whether consumers excluded from credit as a result of the price cap are turning to illegal money lenders. In addition, the Call for Input will look at:
- High-cost credit products to assess whether they cause consumer detriment and whether further and more consistent regulatory intervention is required across the market;
- Overdrafts, to assess price transparency and the nature/level of charges from both a competition and consumer protection perspective; and
- The impact that repeat/multiple HCSTC borrowing has on the market and consumers.
The Call for Input is part of a wider evidence-gathering exercise that will also include various stakeholder events and a consumer survey on the HCSTC price-cap. The results of the price-cap review and information on further work identified as a result of the other issues covered by this Call for Input will be published in mid-2017.
For those firms which undertake guarantor lending, the FCA has now published its Finalised Guidance on default notices.
Publications and consultations in 2017
In addition to the above, the FCA will also publish its findings from a thematic review of staff remuneration and incentives in 2017. It also expects to issue consultation papers on:
- Measures to give consumers more control over their credit limits;
- Rules requiring firms to identify and intervene accordingly when there are early signs of debt problems; and
- Rules requiring firms to make certain interventions on an escalating basis when a consumer has persistent debt problems (for example to offer a more structured repayment plan).
How we can help
Bovill have worked with a wide range of consumer credit firms, ranging from banks to brewery companies, payday lenders to technology companies and rent-to-own firms to estate agencies. We can help with FCA authorisations, regulatory gap analyses and health checks, regulatory training and other regulatory change projects. Give Prem Griffith a call to discuss on 0207 620 8454.