TT193: Do you need/have a Consumer Credit Licence “CCL”?
If so, you need to be aware of important changes that could affect you.
The Financial Conduct Authority (FCA) will take over regulation of consumer credit from the Office of Fair Trading “OFT” on 1 April 2014.
Importantly, all firms who currently hold a CCL will only be able to trade under their existing CCL until the 31 March 2014. All existing CCLs expire on this date at midnight and if you have not taken action you will not be able to continue your licensable activities
If your business sells goods or services on credit, or offers goods for hire to consumers (broadly individuals/partnerships), you may need to be licensed. Common examples of businesses which need a CCL are listed below.
Engaging in licensable credit activities without a CCL is a criminal offence, and can result in a fine and/or imprisonment. Businesses cannot normally legally enforce a credit agreement if they are not licensed.
Importantly, all firms who currently hold a CCL will only be able to trade under their existing CCL until the 31 March 2014. All existing CCLs expire on this date at midnight and if you have not taken action you will not be able to continue your licensable activities.
All firms who wish to continue trading after 31 March 2014 will need to be registered with the FCA. From 2 September 2013, current OFT licence holders have been able to register with the FCA for ‘interim permission’ to carry on regulated activities from 1 April 2014. Current licence holders should have also received a pack from the FCA in early September explaining these changes.
The transfer of regulation from the OFT to the FCA is part of the Government’s programme of regulatory changes for financial services. Further information can be found on the FCA and OFT websites.
Business activities which require a consumer credit licence
Whether you need a consumer credit licence, and the categories of activity that your licence covers, will depend on what your business does. You are likely to need a consumer credit licence if you:
• lend money that is not for a first charge mortgage
• allow your customers time to pay for goods and/or services that they buy from you (including hire purchase)
• hire or lease out goods and/or services for more than three months
• introduce buyers to someone else who will lend them money
• help people with debt problems
• adjust a consumer’s existing debts
• consolidate debts on behalf of a customer
• give debt advice
• collect debts arising from consumer credit or hire agreements where you are not the creditor
• carry out administration duties in relation to a credit or hire agreement
• provide information about a consumer’s credit rating
• offer to repair someone’s credit rating
• act as a credit reference agency
You are not likely to need a CCL if your only transactions are with other limited companies and/or PLCs. Similarly you are not likely to need a CCL if you only offer fixed sum, zero per cent APR loans/credit for goods and services, lasting up to one year and collected in four instalments or fewer.
What do you need to do?
If you have an existing licence you need to visit the FCA website and apply for an interim permission so that you can continue carrying out consumer credit activities after 1 April 2014. If you are not currently registered but you think the consumer credit licensing regulations may apply, you should contact either the OFT or the FCA to discuss your situation. Entities that are regulated by the FCA often have wider accounting/auditing and reporting requirements. Your Barnes Roffe contact partner will also be happy to discuss your particular situation with you.Talk to Barnes Roffe today