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The Credit Services Association (CSA)
First six months of FCA regulation addressed during BBA Consumer Credit Seminar
Linda Woodall, director of mortgage and consumer lending at the Financial Conduct Authority (FCA) has given a speech at the BBA Consumer Credit Seminar in London, the full text of which is now on the FCA website. The speech took the opportunity to summarise how the first six months of FCA regulation of consumer credit has gone and to highlight some of the issues identified in that period. The salient points of the speech are summarised below.
- Reminded firms that the FCA approach to regulation will be different to that of OFT. FCA has greater resource and a larger toolkit. It will measure what firms do against its principles.
- FCA expects firms to provide good consumer outcomes at every stage of the credit journey including: “post-sale problems, including debt recovery, debt management and complaints handling”.
- Reminded firms to be aware of the deadline for their full permission application and to prepare early.
- Visits by FCA to debt collecting firms will start shortly.
- Of the fifteen areas that categorise consumer credit regulated activity, four have generated the most alerts from consumers and trading standards authorities so far: credit broking, debt management, debt collectionand payday lending.
- In the context of thematic reviews short term high cost credit and debt management are the current subjects but others will follow.
- Unauthorised transactions are also being reviewed by FCA and in this context CPAs which are not cancelled at the customer’s request or which are made difficult to cancel will be treated by FCA as unauthorised transactions.
- Firms are advised to consider how they approach overseeing any work that is outsourced. The FCA has found examples of outsourcers stepping over the line by dealing with customer’s consumer credit queries instead of providing a purely administrative service.
- The results of the FCA’s review of consumers in vulnerable circumstance will be published in early 2015.
- In terms of what good looks like the FCA expects to see firms “doing the right thing” for consumers at every stage and for credit firms that means: Transparent communication, responsible lending based on a sound affordability assessment, treating customers in difficulty with forbearance and providing suitable debt advice in the way the consumer wants to access it.