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The grey areas of FCA consumer credit rules


Firms have been having difficulty with the transition to the FCA’s new consumer credit regime. Early messaging was of “no change” as there were no new rules and interim permissions were straightforward. This was based on a monstrous assumption  that firms already held the correct categories and only the categories they needed. The old Office of Fair Trading regime was never that simple and the Association of Mortgage Intermediaries has long been in debate with the OFT and firms over the correct categories of licence.

There has been confusion over whether a licence is required to introduce unregulated buy-to-let. The exemptions applied to mortgages do not extend to second-charge mortgages and when looking at consumers’ credit reference data. All of this seemed unimportant when licences were cheap, lasted five years and there was limited OFT supervision.

FCA-regulated firms now have lawyers and compliance specialists crawling all over the consumer credit rules. They are finding some firms do not hold the appropriate categories or permissions. Business mandates are closing down because of technical issues with permissions in an interim regime. This is limiting where brokers can place business, so preventing them from acting in the consumer’s best interest. 

There is also an issue with landing slots to apply for full permissions. Despite assurances second-charge brokers would be left until last, many are being called earlier. There is concern firms will be paying for permissions that will fall away later. Some are part of networks that do not yet have their own permissions to offer appointed representative status.   

Robert Sinclair is chief executive of the Association of Mortgage Intermediaries 



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