Tuesday, June 18, 2013

Consumer Credit Licences

I had drafted a nice long article on the proposed changes to the consumer credit licensing regime, but R3 got in before me, sending out an email Newsletter on 30 May! Rather than post my article I thought that I would just emphasise a couple of points made in the Newsletter.

First, we are fully behind R3 and the RPBs in their work to try and persuade the Treasury and the FCA that the new regime as set out in the consultation papers is ignoring the highly regulated nature of the insolvency profession and treating IPs in the same category as unregulated debt advisors, which is clearly not appropriate.

The second point is to stress the uncertainty for IPs currently covered by the current group licensing regime. Licences under the DPB regime, which will replace the group licensing regime will only cover the work of a practice in the consumer credit sector that is “incidental to its professional business”. If giving advice to individuals is not considered to be “incidental” to the business of your practice, then you will probably need separate authorisation under the FSMA regime. At present there is no definition of “incidental” and whilst R3 and the RPBs are pressing for one, you need to bear in mind that if you need to apply for a licence for your practice the application can take several months to process. On balance, our feeling is that it is probably safer to apply for a licence now rather than face uncertainty and possibly run out of time later.