This week has seen the FCA's Tracey McDermott provide an evaluation of the first two years of FCA regulation of consumer credit and its expectations of firms.


FCA speech: Consumer credit regulation: the journey so far

Tracey McDermott, Acting Chief Executive, Financial Conduct Authority, delivered a speech at the Credit Summit 2016 on 7 April 2016, looking at the progress of consumer credit since its regulation transferred to the FCA in 2014.

FCA, 8 April 2016  

FCA Finalised Guidance: Small and Medium Sized Business (Credit Information) Regulations

The Financial Conduct Authority has published finalised guidance on the Small and Medium Sized Business (Credit Information) Regulations 2015. The purpose of these regulations is to foster competition between banks by helping newer banks and alternative finance providers to carry out underwriting assessments, thereby helping SMEs obtain finance. The FCA's guidance explains the scope of the regulators functions under the regulations and how they intend to monitor and enforce them. Currently, it does not plan to impose regulatory fees for this work although it may do so where, for instance, a firm has failed to comply and additional work is required. 

FCA, April 2016

Modification by consent for hybrid lifetime mortgages published by FCA

The Financial Conduct Authority has published a modification by consent in relation to hybrid lifetime mortgages; a decision which has been welcomed by the Council of Mortgage Lenders. Hybrid lifetime mortgages give consumers the opportunity to roll up the interest payable on their mortgage meaning there is no risk of arrears and repossession should payments be missed. Under the rules, firms can apply to dispense with affordability assessments for hybrid lifetime mortgages. To do this, firms need to apply for a "modification by consent" (or waiver) and intermediaries can rely on the provider’s modification. The product disclosure rules at MCOB 9.4 and the prescribed text in the KFI at MCOB 9 Annex 1 will be amended in light of these changes. The waiver will expire on 7 April 2017, but the FCA will consult on rules changes.

FCA & CML, 7 April 2016

PRA consultation on revised supervisory statement on building societies' treasury and lending activities

The Prudential Regulation Authority has published a consultation paper (CP12/16) on a revised version of its supervisory statement (SS20/15) on building societies' treasury and lending activities. With regards to lending, amongst other matters there is an update on buy-to-let lending (i.e. when to treat as commercial and not residential), and on the risks associated with equity release. The consultation runs until 4 July 2016.

Bank of England: PRA, April 2016 


Growth continues in consumer finance

New figures published by the Finance & Leasing Association (FLA) have found a 22% growth in consumer finance new business in February, compared to the same month in 2015. Asset finance new business (primarily leasing and hire purchase) also grew by 9% and the point-of-sale consumer new car finance market saw new business grow 27% by value and 22% by volume. 

FLA, 8 April 2016  

Letters on tax deductibility of fines imposed by regulators on banks

The House of Commons Treasury Committee has published two letters sent between Committee Chair, Andrew Tyrie, and Chancellor of the Exchequer, George Osborne in relation to prohibiting the tax deductibility of fines imposed by regulators on banks.

UK Parliament, 7 April 2016


European Commission roadmap on proposed Directive amending MLD4

The European Commission has published a roadmap which relates to the proposed Directive to amend the Fourth Money Laundering Directive. The proposal is likely to be published in Q2 2016. There are five amendments which arise out of recent terrorist events requiring urgent action which are:

  • enhanced due diligence measures/counter-measures with regard to high-risk third countries;
  • virtual currency exchange platforms – measure to reflect the fact that it is harder to trace virtual currencies;
  • prepaid instruments – addressing issues with their anonymous nature;
  • the access of Financial Intelligence Units (FIUs) to information and strengthening FIU powers and cooperation;
  • FIU access to bank and payment account registers or electronic data retrieval systems.

European Commission, 7 April 2016

Joint Committee of ESAs discussion paper responses to automation in financial advice

The European Banking Authority (EBA) has published the responses it has received to its discussion paper on automation in financial advice. The EBA's paper looked at the main characteristics of automated financial advice, giving an initial assessment of the benefits and the potential risks to consumers before providing a view as to how the market might evolve.

EBA, 4 April 2016