It is now more than three years since the start of the new regulatory regime for the consumer credit industry and nearly all firms will have obtained their required permissions. However, this is an ever changing regulatory environment with a number of reviews and changes on the horizon so keeping up to date with these developments is essential. The legal experts at DWF remain on hand to help you navigate all the relevant requirements and frequent changes.
When the FCA took over the regulation of the consumer credit industry in April 2014 it brought with it a plethora of new guidance and consumer credit regulations for firms to get to grips with, promising greater scrutiny and wider and more robust powers of enforcement. It is therefore vitally important that businesses are fully aware of and fully compliant with this new style of governance.
Below we have highlighted some of the key areas for focus under the FCA regime and provide useful resources and top tips to ensure you have all of the information you need to stay up to date.
DWF Conforma is designed to help you navigate your business through complying with the new FCA regulatory regime. It provides a flexible and cost-effective means of understanding how compliant your business is.
Treating Customers Fairly (TCF) is a topic which is very high on the FCA’s agenda. The FCA expects TCF to be central to firms’ business models and culture with the consumer being at the heart of everything they do. Firms are required to demonstrate that they consistently treat their customers fairly and are delivering their services against the TCF outcomes relevant to their business.
The FCA places responsibility on senior management to embed TCF in the culture of their businesses. This allows firms some degree of flexibility in approach but, it is imperative that they get it right – where the FCA finds failings in a firm around TCF it will use its full regulatory powers to take action.
Are your customers at the heart of your business? They should be.
“Vulnerability” cannot be ignored. With the FCA stating that “most users of consumer credit may be regarded as “vulnerable” to some degree because of their financial circumstances”, this is an area firms must not get wrong. Are you providing your vulnerable customers with adequate safeguards? The FCA promises proactive supervision of firms in this area.
Staff should receive specific training in this area and firms must have proper documented processes and procedures to ensure compliance.
“Complaints matter, and how they are dealt with can say much about a firm’s culture” (FCA TR14/18). The FCA believes that complaints can assist firms in enhancing and retaining customer relations; are a vital part of the connection between firms and consumers and can give firms the opportunity to learn from their mistakes and improve their products and services.
Firms need to have effective and transparent complaints processes and procedures which ensure that complaints are dealt with “reasonably, promptly and fairly” (FCA, TR14/18).
The Bank of England Financial Policy Committee has released a statement summarising the recent work carried out by the FPC in relation to consumer credit lending.
The UK’s total consumer debt bill is close to £200bn and is growing at its fastest rate for 12 years. There are some troubling parallels with 2008 and what is happening in today’s credit-fueled car market.
The FCA’s recent consultation on staff remuneration and incentives should really come as no surprise to lenders, but its reach beyond regulated lending into sales practices in retailers and dealers, the success of whose businesses is down to the growth in retail finance, may cause shockwaves throughout that sector but should it come as any real surprise, even more so for those involved in collections?
Whilst there is considerable ongoing discussion and speculation about the impact of Brexit, much of this has been about the economic and political consequences of this historic event. How do we think consumer credit lenders might be affected?
The Money Laundering Regulations 2017 (“MLR 2017“) are yet to be finalised but are due to take effect on 26 June 2017. The MLR 2017 will implement several changes, particularly to risk management.
The FCA recently published its business plan for 2017/18 focusing on a number of cross sector priorities to help it meet its main statutory objectives. There are seven financial market sectors which the FCA considers, including, among others, retail banking and lending, retail investments and pensions and retirement income.
DWF’s expertise in consumer credit law is recognised nationally and we have specialist teams located across the UK. Our leading UK team provides the retail, consumer, motor sectors with industry focused advice and are praised for delivering advice that fits perfectly into clients’ businesses.
We strive to provide a full life agreement consultative approach to the way we do business to support our lender clients in providing them with a holistic approach to compliance and regulation. The team’s experience covers all areas of consumer credit, insurance mediation, mortgage regulation and other financial services regulated products from advertising and drafting documentation through to implementing new business initiatives.