On 13 February 2020, the FCA published a letter setting out its views on the key risks credit brokers could pose to their consumers or markets. Credit brokers are asked to consider the extent of these risks in their business and assess if their strategies reduce the risks.

The FCA explains that it has examined a range of information and data, including firms’ regulatory histories and the type and number of complaints to assess how credit brokers could cause harm. The FCA sets out what it found:

  • many firms did not understand their regulatory requirements;
  • firms have poor oversight of staff and/or appointed representatives’ activities;
  • the increased risk of harm to customers by domestic premises suppliers where the sale of goods or services is made in the home, especially when such customers are vulnerable;
  • misleading or inaccurate financial promotions;
  • firms not explaining the level of service provided, or other factors likely to influence a customer’s decision;
  • where the firm is responsible for providing product information, not providing adequate or relevant information to allow consumers to make informed choices about finance products or taking reasonable steps to ensure recommended products are not unsuitable; and
  • not considering or managing the risks to their business from technology, cyber-attacks and inadequate IT resilience.

The FCA adds that it will prioritise its supervisory work in the area of accurate regulatory data. It reminds firms that are subject to the rules in SUP 16.10 that they must review and confirm their details annually, within 60 business days of their accounting reference date. Even if a firm’s details have not changed from the previous year, it will still need to log on to Connect and confirm that they are up to date.