Solicitors’ firms may need to seek their own consumer credit licence from the Financial Conduct Authority (FCA) if they want to continue with consumer credit activities, the Solicitors Regulation Authority (SRA) has advised.
The FCA will take over the regulation of consumer credit activity from the Office of Fair Trading (OFT) on 1 April next year. The group licence under which SRA-regulated firms currently operate will cease to have effect from that date.
Currently, the Law Society Group Licence allows firms regulated by the SRA to carry out certain consumer credit activities under the group licence conditions without the need to apply to the OFT. The FCA will not be continuing the group licence regime, so SRA-regulated firms wishing to continue in these activities, like debt collecting, may need to be licensed by the FCA, paying authorisation fees and regulatory fees
Firms that have their own OFT consumer credit licence already will need to apply for interim permission. The application process for this began on 1 September 2013.
Only firms with a current OFT consumer credit licence will be eligible to apply for the interim permission. Firms carrying consumer credit activities without this permission after 31 March 2014 will be committing a criminal offence and a breach of FCA regulations.
Agnieszka Scott, SRA Director of Policy and Strategy, said: “Firms will need to consider how the removal of the group licence regime is going to affect them and how they manage their business going forward. Firms may wish to apply for an individual OFT consumer credit licence to enable them to meet the criteria for the interim permission process, or they will need to consider the criteria set out in the Financial Services and Markets Act 2000 and are exempt from FCA authorisation.
“To help firms we have published some more information and links on our website. We will shortly be publishing a “questions and answers” section to help firms making decisions. We will keep our website up-to-date with links to the FCA website and publish any further information we obtain.”
The changes were consulted on by both HM Treasury and FCA during 2013 with the legislative changes being made in July 2013. The FCA has committed to publishing a detailed consultation, setting out its rules and guidance for regulating consumer credit activities later this year.
Forms and guidance on how to apply can be found on the FCA’s website here: