Ahead of the transfer of regulation of consumer credit and related activities in the UK from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) on 1 April, representatives from CIT Vendor Finance, The National Association of Commercial Finance Brokers (NACFB) and Asset Finance Solutions (AFS) discuss the steps they are taking.
Julie Henehan, sales director at CIT Vendor Finance UK
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
We have been working hard to evaluate the impact the transfer will have on our own operations, as well those of our vendor and intermediary partners.
We are supporting our vendor and intermediary partners by helping them to understand the key requirements of the Consumer Credit Act (CCA) and the importance of applying for their interim permission with the appropriate license categories for their business before 1 April.
Time is of the essence and if they secure their interim permission before 1 April they will be able to continue to operate effectively in their business prior to seeking their full permission. Without interim permission they will need to apply directly to the FCA for a new CCA License and until it is granted they will not be able to transact regulated business.’
Adam Tyler, chief executive of the NACFB
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataAt the National Association of Commercial Finance Brokers (NACFB), we have been issuing advice to our members since last summer on the topic of the Consumer Credit Act.
The main focus has been to advise all our members that they must apply for their interim permission regardless of their plans post 1 April. We have also gone as far as discussing certain categories for classes of commercial brokers.
The view of many of our members is that the speed of implementation has left little time for useful consultation or reflection. However, it is imperative that brokers obtain interim permission before 1 April. Brokers need to realise that after that date any pre-existing Consumer Credit Licence (CCL) will no longer be valid.
The NACFB recently met with leading asset funders at a round table meeting to discuss their thoughts on the new regime and to obtain perspectives on the future of broker-funder working relationships. The general opinion was that they need their panel brokers to be authorised as they are concerned about regulated business coming through their systems from a broker who does not hold a Consumer Credit Licence.
Given likely enforcement by the FCA, one can expect that all funders will demand brokers be authorised so that regulated agreements do not fall foul of this new regime. I appreciate that it will also save the funder having to consider who on their broker panel is regulated and who is not, while correlating this information for any business that is submitted.
The legal view is that every business is different and each firm needs to take specific advice on their own business model to establish whether or not the activities are regulated or unregulated. It is difficult to give blanket advice, but hopefully clarity is around the corner.
The NACFB is looking to change its long established stance on insisting that all members hold a CCL. It is clear that the FCA will not grant new licences in the future to brokers who are not in the regulated market.’
Nick Simpson, managing director Asset Finance Solutions
At Asset Finance Solutions (AFS) preparation for the introduction of the FCA began over 12 months ago when the directors initially appointed a compliance officer.
We spent time reviewing our business practices to ensure we were fully compliant with existing OFT guidelines. This also included advising all parties that have any involvement in progressing a deal, including our suppliers, introducers and franchisees to obtain their own consumer credit licence, appropriate categories and interim permission. The categories we advised people to obtain were C, D and E, which appears to be aligned with the majority of the Funders.
We’re not entirely sure on the rationale for needing D and E but there has been communication from the OFT to suggest this should be the case. We have also been in regular contact with funders throughout this time and some have been much clearer on their requirements and at a much earlier stage. However, there has also been a lack of clarity and consistency across the industry, which I assume is caused by the tight timescales we have been working with here.
Much time has been spent over the last six months, in particular, on shaping our business with the future in mind, which includes preparation for obtaining our Principal status. The new structure of Principal and Authorised Representatives (ARs) on the face of it looks a perfect fit with our current Franchise network model.
The directors of AFS didn’t take the decision to go for Principal status lightly as we will all become personally liable for the performance of the ARs in relation to every aspect of the nine Principles and Responsibilities associated with the FCA regime.
It is also clear from the activity of the FCA, including the issuing of fines in its first 10 months – equivalent to more than half of the total fines issued in the 11 years of the FSA – that we will all need to take regulation under the FCA very seriously indeed.
There is still much work to do here at AFS ahead of receiving the call in July from the FCA to start the Principal authorisation process, but we remain positive for the future of AFS and the market in general.’
