On 1 April 2014 the Financial Conduct Authority (FCA) became responsible for the regulation of consumer credit in the UK.
From that date any firm or individual that provides debt counselling to consumers must be authorised by the FCA. Unauthorised debt counselling is in breach of section 19 of the Financial Services and Markets Act 2000 (FSMA). This is a criminal offence carrying a maximum prison sentence of two years, a fine, or both. Please note that the FCA’s definition of ‘firm’ includes not for profit organisations providing free debt advice.
What does being regulated by the FCA mean?
The FCA has published a guide for consumer credit firms that are new to FCA regulation. This can be found at: Consumer credit – Being regulated – Guide
Regulated firms are expected to meet the standards set out in the FCA’s Handbook of Rules and Guidance. Its detailed conduct standards for firms carrying out consumer credit activities are set out in its Consumer Credit Sourcebook (known as CONC). The relevant section for debt advice is CONC 8, which can be found at Handbook – CONC 8. Advisers who are familiar with the Office of Fair Trading’s (OFT) Debt Management Guidance will see that they are similar in many ways. The FCA expects that firms will ensure that all employees (this includes both paid staff and volunteers) comply with CONC.
Firms are also expected to meet the FCA’s high level standards, including its Principles for Businesses (PRIN). Firms must comply with PRIN at all times.
From 1 April 2014 firms regulated by the FCA are also subject to the jurisdiction of the Financial Ombudsman Service (FOS). This means that if a consumer has a complaint about the way in which a consumer credit matter has been handled by a firm, they have the right to pursue their complaint to FOS. The Disputes Resolution: Complaints (known as DISP) section of the FCA Handbook sets out the detailed requirements for handling complaints and the FOS arrangements. You will find useful guides for small firms on the FOS website via the link. FOS also has a technical advice desk. This can give informal guidance on how the ombudsman might approach a particular complaint, or answer more general questions about its rules and how it works. Click here for contact details for the technical advice desk.
Where can I get help or further information?
AdviceUK cannot apply for FCA authorisation on behalf of members. However, if you have any questions about either FCA regulation or FOS jurisdiction, please email David Hawkes, AdviceUK’s National Money Advice Co-ordinator, at firstname.lastname@example.org.
More information can also be found on our FCA Frequently Asked Questions page and on the FCA Resources page in the For Members area of our website.