FSA CP13/7: Consumer credit regulation - our proposed regime

On 1 April 2014, the regulation of the consumer credit market will be transferred from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA). This move was announced by the Government, with the aim of increasing protection for consumers. The Government has now published a consultation document setting out its proposals for this transfer.

Why are we issuing this consultation paper (CP)?

In line with the Government’s paper, we are now consulting on how we propose that the FCA will carry out its new functions and powers.

At this stage we are mainly asking you for your thoughts on the proposed framework and rules for the new consumer credit regime. We will consult again later in 2013 on the details of the regime’s design, taking account of your responses to this paper.

We will also be offering you support throughout the transfer period and in the lead up to it, including through other publications and plain-language guidance.

Who is this CP aimed at?

The majority of adults in the UK are customers, or potential customers, of financial services firms. So anyone may be interested in commenting on how we propose to regulate consumer credit firms. We have included a box at the start of most chapters describing what we think are the main benefits of our proposals, and a box at the end of every chapter summarising what our proposals are.

In particular our proposals will interest:

  • firms that currently hold individual or group consumer credit licences issued by the OFT under the Consumer Credit Act (CCA);
  • firms that want to carry out consumer credit activities in future;
  • trade bodies representing consumer credit firms;
  • consumer bodies;
  • not-for-profit bodies providing debt advice;
  • operators of peer-to-peer platforms; and
  • other bodies currently involved in regulating consumer credit, including the Local Authority Trading Standards Services and the Department of Enterprise, Trade and Investment (Northern Ireland).

What are the key proposals in our CP?

Our CP includes proposals on:

  • An interim permission for OFT licence holders to continue to carry on regulated consumer credit activities.
  • The authorisation process, including:
    • a normal FSMA-authorisation process for higher-risk regulated activities;
    • a lower-cost limited permission authorisation option for firms carrying on certain lower-risk credit activities;
    • the option to be an appointed representative for firms carrying on certain credit activities;
    • an approved persons regime, which is different depending on the type of firm applying;
    • a proposal that interim permission holders will need to apply for full authorisation from late 2014; and
    • a proposal that new entrants wanting to begin consumer credit regulated activities after 1 April 2014 will need to apply for authorisation.
  • The supervision of credit advertising being subject to the FSMA financial promotions regime.
  • Prudential requirements for debt management firms.
  • A number of the Consumer Credit Act (CCA) provisions being kept as part of the new FCA credit regime (e.g. S75CCA).
  • The supervision of – and reporting by – firms.
  • How the regime will be funded.

Consultation paper

What are the next steps?

Please send us your comments on our CP by 1 May 2013. You can do this by using our online response form, or using the contact details on page 6.

We will review all your responses and publish our feedback. You can find more information on our expected consumer credit publications in Chapter 14.

Want to find out more?

For more information: