The FCA has published a new webpage entitled Consumer Credit – exemption for instalment credit.

The new webpage discusses the revised exemption for instalment credit which came into force on 18 March 2015 and provides further information for firms that are either FCA authorised or hold interim permission. The webpage also provides information concerning refunds.

The new legislation states that a credit agreement will be exempt if it meets all of the following criteria:

  • it is repayable by no more than 12 instalments (e.g. monthly), within no more than 12 months;
  • it is a borrower-lender-supplier agreement (i.e. it finances the acquisition of specific goods or services);
  • it is for a fixed amount; and
  • it involves no charges or interest (e.g. there can be no admin fee) or is secured on land.

Firms who only enter into or who only broker agreements that meet the relevant criteria do not need to be authorised for consumer credit unless they carry on any other kind of credit-related regulated activity.

The revised exemption is not retrospective so regulated agreements entered into before 18 March 2015 do not become exempt as a result of the new legislation even if they meet the criteria. Firms who have rights under such agreements (e.g. they are owed money under them) are reminded that they are carrying on the regulated activity of exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement and must hold permission to do this until they no longer have any such rights (e.g. the debts have been paid off, written off, or otherwise disposed of).

View Consumer Credit – exemption for instalment credit, 18 March 2015