Consumer credit regulation

On 1 April 2014 the Financial Conduct Authority (FCA) took over the regulation of consumer credit from the Office of Fair Trading (OFT). Consumer credit is now regulated under the Financial Services and Markets Act (FSMA) and the Regulated Activities Order (RAO), in a similar way to Investment Business.

ICAS has arrangements in place which enable firms to provide consumer credit services without the need for authorisation from the Financial Conduct Authority (FCA). There's no application to complete and no fee to pay. If firms meet the eligibility criteria, then such consumer activities can be undertaken, provided that they are undertaken as set out in the DPB (Consumer Credit) Handbook. As these arrangements are made under Part XX of the Financial Services and Markets Act 200, the service may only be provided in a manner incidental to the activity of the firm generally, and which arises out of, or is complementary to, another professional service, which is not itself a regulated activity, provided to a specific client (as with investment business).

A firm authorised by the FCA cannot use these arrangements. It must hold the relevant FCA permissions to undertake credit-related regulated activities.

News Alerts

News Alert - 2 March 2016: ICAS consumer credit regulations – effective from 1 April 2016

The Financial Conduct Authority (FCA) has approved our new consumer credit regulations, called the Designated Professional Body (Consumer Credit) Handbook. These new arrangements will come into effect on 1 April 2016 and our transitional arrangements will cease. The link to the Handbook is at the bottom of the page.

News Alert - 25 February 2015

Following lobbying by ICAS and many other bodies, Parliament has approved a statutory instrument effective from 18 March 2015, which de-regulates instalment credit where there are 12 or less payments in a 12 month period and there is no interest charged. This is good news for many of our firms whose only previous involvement in consumer credit was offering clients the ability to pay fees by monthly instalment. Effective from 18 March 2015 this activity will no longer fall within consumer credit regulation. This exemption is not, however, retrospective and will only apply for agreements entered into on or after 18 March 2015. If firms wish to take advantage of this exemption, new agreements with clients will be required and firms must obtain each client's written consent to any new agreement.

For any Instalment credit agreements entered into before 18 March 2015 the previous exemption applies, which are that these are only exempt credit agreements where there are 4 payments or less in a 12 month period, with no interest or charges (except for default charges). For any instalment credit agreements which are not exempt, the consumer credit firm must continue to comply with our Consumer Credit (Transitional Arrangements) Regulations for now and in due course the permanent (Consumer Credit) Handbook.

For more information about the instalment exemption please refer to the Instalment Credit Exemption below.