The FCA has published Policy Statement 15/23: Consumer credit – feedback on CP15/6 and final rules and guidance (PS15/23).

In PS15/23 the FCA sets out its response to the feedback it received to its February 2015 Consultation Paper 15/6: Consumer credit – proposed changes to our rules (CP15/6) and publishes final rules and guidance.

In CP15/6, the FCA proposed some relatively minor changes to its rules and guidance in relation to credit brokers, lending (including guarantor lending), financial promotions and debt. Some of these were intended to address areas of harm to consumers that had come to light through the regulator’s experience of supervising the consumer credit market. Others were clarifications or amendments to ensure that the FCA’s rules reflect its policy intention or respond to issues raised by stakeholders.

In PS15/23 the FCA notes that generally respondents supported its proposals and therefore it is introducing the majority of the changes it consulted on. However, in light of some concerns that were raised the FCA has amended some of its proposals and deferred others for further consideration. In particular, the FCA has amended the scope of the proposals on guarantor lending and allowed for the pre-contract explanation to be provided as part of independent legal advice, subject to appropriate safeguards. Certain aspects of the proposals on financial promotions have also been modified.

Chapter 7 of PS15/23 sets out next steps noting that the new rules and guidance will generally come into force on 2 November 2015 although some of the changes come into effect earlier on 28 September 2015. In relation to future consumer credit related work the FCA states that:

  • it plans to take forward further work on credit broking and guarantor lending with a view to potentially consulting on new rules and guidance in 2016;
  • it previously announced: (i) a review of how its consumer credit rules apply to cold-calling and unsolicited marketing of credit products and services; (ii) a review of repeat and multiple borrowing in the high-cost short-term credit (HCSTC) market; and (iii) work on how firms assess creditworthiness (including affordability), with a view to consulting on changes to its rules and guidance;
  • it will shortly be publishing a consultation paper on the Competition and Markets Authority recommendations to the FCA in relation to remedies in the HCSTC market following its payday lending market study;
  • it will review the remaining provisions of the Consumer Credit Act and report to Ministers by 1 April 2019;
  • two thematic reviews were mentioned in its Business Plan for 2015-16 covering: (i) staff remuneration. The thematic review will cover a broad range of sectors including firms where consumer credit is secondary to their main business; and (ii) early arrears management in unsecured lending. This project will look at early arrears – from the identification of customers in probable difficulties at a pre-arrears stage to the point at which the lender formally defaults the customer and/or ‘charges off’ the debt; and
  • it plans to publish an interim reporting outlining its interim findings from the credit card market study in autumn 2015.

View PS15/23: Consumer credit – feedback on CP15/6 and final rules and guidance, 28 September 2015