Consumer credit licences ceased to be valid on March 31 2014. Firms wishing to conduct consumer credit activities now need to be authorised by the Financial Conduct Authority (FCA), however credit authorisation is still often colloquially referred to as a ‘credit licence’.
The precise application method to be followed depends on the firm’s current position:
• A firm that is already authorised by the FCA for other activities can apply to add consumer credit permissions by submitting a Variation of Permission application via the Connect system on the FCA website.
• A firm wishing to enter the consumer credit market for the first time can submit a new application to the FCA
• A firm that previously held a Consumer Credit Licence from the former Office of Fair Trading, and which now holds interim permission from the FCA, can apply to upgrade to full permission. However, whilst applications from firms in the first two categories can be made at any time, these applications must be made within the firm’s designated ‘application period’. When this application period is depends on the type of activity the firm carries out, and in some cases on their postcode. For some firms, their application period has already ended, whilst others may not need to apply until early 2016. However, firms must ensure they are totally clear as to when their application period is, as if they fail to submit an application before the end of this three month window, they will lose their authorisation
Firms can expect to have to provide comprehensive financial and non-financial information in their application. Examples of documentation the FCA is likely to require includes:
• A regulatory business plan
• A risk management strategy
• Compliance procedures, e.g. sales process, complaints procedure, data protection procedure, rule breaches procedure
• Evidence of how the firm will ensure it will treat its customers fairly
• Evidence that the firm has systems in place to combat financial crime
• Details of the intended remuneration structure
• Marketing strategies to be used
Individual authorisation for key personnel, e.g. directors, chief executives, heads of compliance and anti-money laundering officers is also required. These individuals will be subject to a series of assessments regarding: honesty, integrity and reputation; competence and capability; and financial soundness.
All firms carrying out credit activities, or wanting to do so, must ensure they understand the application procedure that will apply to them.