Any firm that offers consumer credit is subject to rules, regulations and visits, from the FCA. You therefore need to check that your business is ready to comply with the standard set by the regulator.
At the point of application:
Firms that are appying for authorisation will be required to demonstrate meeting the regulator’s threshold conditions.
For example, amongst other things, to achieve full authorisation you will be required to demonstrate the following:
- Have at least one ‘approved person’ (except for some sole traders) and have the appropriate resources available to meet debts
- Be able to define any third party involvement and outline relationships with introducers
- Provide an organogram, compliance plan and demonstrate your approach to financial crime
- Demonstrate suitability in that key individuals have the relevant experience to carry out their roles, particularly those holding significant influence or controlled functions
- Provide an explanation of the business processes that you undertake regarding suitability, debt counselling and conflicts of interest
- Prepare and provide a regulatory business plan and demonstrate effective supervision
- Demonstrate business systems and controls, and that the firm has a Treating Customers Fairly ethos
Many firms think that once their application is accepted, that's the end of the story. If only it were so simple...
As part of your ongoing responsibilities, the FCA requires all firms to report data to them through the GABRIEL reporting system. While there are slight variations depending on the nature of your business, a typical return includes turnover, transaction numbers, complaints and the number of customers. This information submitted via GABRIEL will then be analysed by the FCA to identify potential risks with a specific firm or a industry sector. Any shortcomings identified will be addressed by the regulator through further supervisory work, on-site visits or, in certain cases, stronger enforcement action.
The FCA requires that all firms actively take measures to prevent themselves and their customers from being exploited by criminals. They are not just interested in how a firm protects itself, but also where its action exposes customers, or a third party to the risk of financial crime.
Most, but not all consumer credit businesses will be subject to the Money Laundering Regulations 2007. The FCA will be very severe with firms who do not comply and where inappropriate measures are taken to ensure sensitive customer data does not fall into the wrong hands.
In light of these requirements, many firms look for support, advice and guidance, in order to be able to continue to offer credit and finance to their clients.