Consumer Credit Authorisation

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Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime The Consunmer Credit License CCL Regulation by the Office of Fair Trading (OFT) Consumer Credit Act 1974 and subordinate legislation Limited number of exceptions Regulated agreements/activities Advertising regulations Generally considered “lower level” regulation than FCA Involvement of RSLs

Community Housing Cymru Cartrefi Cymunedol Two initial consultations: HM Treasury and Financial Services Authority (FSA) FSA now the Financial Conduct Authority (FCA) Transfer of regulation from OFT to FCA on 1 April 2014 Replicating a lot of the previous regime in terms of substance with some exemptions FCA Handbook Changing landscape

Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime FCA Rigorous application process Change in terminology: no longer apply for licence but for authorisation to carry on regulated activities Different regulation requirements: two-tiered system with higher and lower levels Application for authorisation with either “limited” or “full” permission

Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime Where are we now? Starting in April 2014, we are now in a two year transitional period – the interim period During this time organisations carrying out “regulated activities” need to apply for authorisation Former holders of a consumer credit licence under the OFT regime should now have an interim permission covering those activities Interim permission lasts until FCA authorisation Holders of interim permission contacted by FCA and given three month window for applications

Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime Where are we now? Ensure activities are within scope of interim permission Carrying out regulated activity without and interim permission Consequences of non-compliance: –Criminal activity –Potential unenforceability of agreements

Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime Regulated activities - what should I consider? Most regulated activities of RSLs generally require limited rather than full permission Examine activities carefully: –RSLs becoming more diverse – carrying out activities that might need authorisation –Some activities are not immediately obvious as regulated consumer credit activities

Community Housing Cymru Cartrefi Cymunedol Consumer Credit – the new regime Regulated activities - what should I consider? Most relevant to RSLs –Credit –Consumer hire –Credit broking –Not-for-profit debt counselling –Not-for-profit debt adjusting –Debt administration –Debt collecting

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Do you discuss with tenants or service users the payment of priority debts over non priority debts, for example paying council tax or rent before the Provy? Do you discuss lowering some areas of expenditure so that the tenant or service user can afford to pay their rent? e.g lowering money spent on smoking to pay their rent Do you help tenants/ service users to contact creditors to make arrangements to repay debts? Do you suggest or recommend debt solutions to tenants or service users to help them with their debts? Do you advice against certain debt solutions for example. Advice against fee charging debt management companies?

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Do you accept deposits from tenants or service users Do you arrange mortgage contracts Do you give debt advice to tenants or service users. For example advice regarding council tax debt, utility debts, water debts (including Customer assistance fund), pay day lenders and debts covered by the consumer credit act. Do you recommend financial products to tenants or service users, including home insurance, credit unions and bank accounts. Do you carry out credit searches for any reason on any individual, including staff members Do you offer loans at a rate of more than 1% plus bank base rate?

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation The FCA took over regulation of consumer credit from the Office of Fair Trading (OFT) in April, requiring landlords to seek new registration or apply for interim permission. The recent article in inside Housing - In Wales: 3 HAs are Authorised. 22 Interim Permissions (just debt 8 counselling) 7 Missed Interim Permission 12 with no data

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 60B(1) Acting as lender where an exemption does not apply. Examples include most unsecured lending and employee loans with a high interest rate. Examples are: Homebuy leases Service charge loans Employee car loans Not the right to buy discount.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 60N(1) Consumer hire business – leasing, hiring or renting goods to individuals. This category does not apply to tenancies of furnished properties or to hire purchase arrangements. Examples are: Hiring out furniture separately from a tenancy agreement Hiring out alarm equipment for the elderly Hiring out IT equipement.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 36A Credit broking – the introduction of individuals to organisations that provide credit or to mortgage advisors (including in both cases FCA regulated individuals or organisations). Examples Giving individuals either lists of banks and building societies that provide first charge mortgages against shared ownership leases/equity mortgage products or lists of mortgage advisers.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 39D Debt adjusting – includes the taking over of debts or negotiations on behalf of debtors. Examples Negotiate with an individual’s creditors for the discharge of the individual’s debts.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 39E Debt counselling – advice for individuals on how to discharge debts which they have already incurred Examples This activity applies to the giving of advice to individuals on how to discharge debts which have arisen under a credit agreement or consumer hire arrangement. This is a regulated activity even if the credit or hire agreement is not a regulated agreement.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 39F Debt collecting – the collection of debts under regulated or exempt credit agreements on behalf of a third party. Examples Collecting debts on behalf of a third party

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 89A Provision of credit information services – obtaining credit information on individuals, such as credit checks, and providing advice on a commercial basis to individuals on how to improve their rating. Examples Credit checks for new tenancies Experian rent models

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Activities article numbers, previously categories: 60B(2) Exercise of the lender’s rights either by the lender or another person under a regulated credit agreement – carrying out any activities (other than debt collecting) in relation to that debt. 39G Debt administration – acting on behalf of a lender or owner in exercising rights under a credit or consumer hire agreement. 89B Credit reference agency – the collation of credit information on individuals and passing on to third parties.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Where do you see the impact on your role?

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation Advice means giving an opinion as a guide to action to be taken, in this case debts. It either explicitly or implicitly steers the customer to a particular course of action. Could what the adviser says reasonably have been understood by the client as being advice which would help him make up his/her mind. Any element of evaluation, value judgment or persuasion is likely to mean that advice is being given.

Community Housing Cymru Cartrefi Cymunedol Consumer Credit Authorisation encouragement guidance help instruction judgment lesson opinion prescription persuasion evaluation proposal recommendation suggestion

Community Housing Cymru Cartrefi Cymunedol Information Paul Langley – Article - FCA Handbook - Jargon buster - decision tool - guidance