The FCA has taken its first criminal action against an individual which it alleges operated as an unlicensed consumer credit lender. Since the FCA assumed responsibility for regulating consumer credit business on 1 April 2014, it has put in place several redress schemes, which have resulted in hundreds of millions of pounds of compensation being paid to consumers, but this is the first time it has opted to take criminal action under its consumer credit powers.

In a case which is due to be heard in Southwark Crown Court on 14 February 2017, the accused is alleged to have conducted regulated consumer credit activities without authorisation. He is believed to have lent over £1 million over the previous four years, acting as a lender of last resort to consumers in difficult circumstances. It is alleged that the accused registered charges against the homes of borrowers so that he could take possession if the borrower defaulted on his or her repayments.

The accused was disqualified as a director for 15 years in a separate action in May 2016 relating to the liquidation of one of his vehicles, Barons Finance Limited, which was investigated by the FCA as part of these proceedings.

Companies or individuals which undertake consumer credit activities will almost certainly need to be authorised by the FCA, and the FCA taking action against an individual who it considered was acting without the necessary authorisation is not particularly remarkable. The tough action which the FCA has taken in this particular case may be explained by the aggravating circumstances, namely the involvement of vulnerable consumers and the lender’s action in taking security over lenders’ properties.