The Financial Services Bill continues to make slow progress through the House of Lords where a far greater level of scrutiny as to its terms has been undertaken compared to that undertaken in the Commons. The debates will continue following the Summer Recess in October.
In practice, from a CCA regime perspective, greater clarity has arisen from the stakeholder meetings that BIS and the Treasury are having with the key trade associations as to how a new CCA regime could be implemented under the FCA’s supervision. Certain aspects of the Government’s thinking has been clarified, for example:
- The Government will undertake a full impact assessment and only proceed with a new regime if it can demonstrate better regulatory outcomes.
- The new regime will not now be fully implemented in 2014, as initially indicated, but will be subject to a transitional arrangement and fully implemented in 2016.
- There is acceptance of some form of grandfathering process to cover consumer credit licences with the concept of perhaps initially “registering” licences as the first stop before moving to the new more demanding authorisation based regime.
There are still a large number of items which are fundamental in nature which need to be resolved, in particular:
- Whether elements of the CCA which may not sit so happily in a rules and principles regime will be retained e.g. the enforceability concept for non-compliance, modifying agreements, involuntary and voluntary termination. Without these steps there is still a real risk that we will end up with a more stringent regime for credit market than the savings market.
- It is still unclear how the licensing regime will operate and the Government still seem keen on the concept of some form of “authorised representative” regime for elements of this.
There is still a long way to go and therefore pressure still needs to be brought through trade associations to try and create a workable regime. In particular the desire to prepare a CCA rule book in 2013 still seems unduly optimistic and likely to lead to more issues than it should.
Decisions on whether a rules and principles based regime is to be adopted will be made in Autumn this year and we are arranging to hold seminars to cover the outcome in October and will circulate details of these shortly.
As part of the Government’s review of consumer credit they have also introduced into the Financial Services Bill powers allowing the OFT to suspend consumer credit licences for periods of up to twelve months where it is considered appropriate to do so. This has arisen from concerns over the current appeals process which can lead to licensees receiving a reminder to revoke a licence having up to two years to respond through the appeals process. The actual detail of the amendments sought will be the subject of debate within the House of Lords in the Autumn and we will circulate further details once they are settled.