On 2 May 2023, the FCA published Consultation Paper 23/9: Changing the scope of the baseline financial resilience regulatory return (CP23/9).
Following the publication of the FCA’s final rules in relation to a new baseline financial resilience return, FIN073, the FCA is proposing to change the scope of firms required to provide baseline financial resilience data in order to exclude a firm with limited permission. This would bring all full permission consumer credit firms in scope of the return. The FCA is consulting on this change to provide an opportunity for those firms impacted to provide feedback.
The proposed change
In its earlier Policy Statement (Policy Statement 23/3), a ‘credit broker’, as defined in the FCA Handbook, is excluded from the scope of FIN073. Following further consideration, in CP23/9 the FCA is proposing to amend this exclusion to ‘a firm with limited permission’, which would bring all full permission consumer credit firms in scope of FIN073. This clarification of scope would bring the population of FIN073 more in line with that of the Financial Resilience Survey (FRS).
The distinction between limited and full permission consumer credit firms is based on the risk of harm posed by each of these firms. Many limited permission consumer credit firms are non-financial services firms with credit broking permission, such as dentists and motor dealers, and the FCA considers that these firms are likely to present the lowest level of risk to its objectives in relation to the rest of the solo-regulated firm population. It therefore considers it proportionate to exclude those firms from the scope of FIN073.
Conversely, the FCA notes that a significant proportion of full permission consumer credit firms primarily undertake financial services activity, presenting a higher risk to its objectives. The FCA therefore proposes to bring these firms in scope of FIN073 so that it can receive up-to-date baseline financial resilience information from them on a permanent basis. The change is also intended to ensure that the consumer credit firms that remain out of scope are easily identifiable based on their permissions.
The deadline for feedback to CP23/9 is 6 June 2023.
Following feedback, the FCA will publish a statement in the summer.