REGULATE
ISSUE 6 , July 2013
Regulate is a quarterly round up of regulatory
issues most relevant to Experian and our clients.
The items featured this
quarter are:
> Transfer of the consumer
credit regulatory regime
> SEPA
> OFT compliance review of the payday lending sector
Transfer of the consumer credit regulatory
regime
As confirmed in the Financial Services Act
2012, the Financial Conduct Authority (FCA)
takes responsibility for regulating consumer
credit from April 2014.
Following the Government’s proposal, in
March 2013 HM Treasury and the Department
for Business, Innovation & Skills (BIS)
published a joint consultation on transferring
the regulation of consumer credit to the FCA,
which set out high-level information on the
new regime, focussing on the main legislative
changes required [1].
The Financial Services Authority also
published consultations on proposals for the
FCA consumer credit regime, which provided
an overview of the likely approach that the FCA
will take to consumer credit firms, including
conduct requirements and supervision [2].
There are a number of proposals, which
include:
• An interim permission for licence holders to continue to carry on regulated consumer credit activities after 1 April 2014
• A full authorisation application process for
all licence holders to be complete by 1 April 2016
• Different regulatory requirements for firms that carry out different activities
• The supervision of credit advertising being subject to the Financial Services and Markets Act 2000 financial promotions regime
• Additional prudential requirements for debt management firms
• The supervision of – and reporting by – firms
• How the regime will be funded
• Greater enforcement powers
Responses to the consultation papers were
due by 1 May 2013.. The Government intends
to lay secondary legislation before Parliament
in Summer 2013 and the final FCA policy
statement on the consumer credit regime
is currently anticipated to be published in
September 2013.
Experian Limited
Landmark House
Experian Way
NG2 Business Park
Nottingham
Nottinghamshire
NG80 1ZZ
SEPA
The Single Euro Payments Area (SEPA)
is a European Commission and European
Payments Council initiative that plans to
remove the barriers and drive down the costs
for making and receiving Euro payments
within the EU, by creating a single set of
standards for Euro payments across the
EU. The migration to SEPA credit transfers
and SEPA direct debits has been set for
1st February 2014. At this point all existing
national payment systems within the Eurozone
will be switched off.
Under SEPA, businesses will benefit from
lower cost credit transfers and direct debits
across the EU, as citizens, companies and
other economic players will be able to make
and receive payments in Euros (whether
between or within national boundaries)
under the same basic conditions, rights and
obligations, regardless of their location.
However, in order to achieve that, companies
must be able to supply a valid IBAN
(International Bank Account Number) and
BIC (Bank Identifier Code) to their banks for
all Euro currency payments and direct debits
within and into, the Eurozone.
A number of sources, including Experian
research and findings from their SEPA Data
Conversion Service, identifies that a large
majority of UK and European businesses
are not currently ready for SEPA migration.
The risk of not being prepared could result
in delays in making and receiving payments
- which will have a negative effect on a
business’s working capital and reputation,
as well as incurring operational costs for any
corrections. Additionally, at its latest economic
and financial affairs meeting, the Council of
the European Union has called on member
states, banks and end users to redouble
their efforts to adequately prepare for SEPA
migration.
Experian remains willing to participate in wider
industry activities to manage SEPA migration
and has made significant efforts to raise
awareness through hosting events, webinars,
communications, white papers and client
meetings [3]. Additionally, Experian provides
a SEPA Data Conversion Service [4] and IBAN
validation solutions, designed to facilitate
migration to SEPA payments and direct debits.
OFT compliance review of the payday lending
sector
In February 2012, the Office of Fair Trading
(OFT) commenced a formal review of
compliance by payday lenders with its relevant
legislation and guidance, in particular the
Irresponsible Lending Guidance.
Following the publication of the final report [5]
in March 2013, the OFT launched a compliance
review of payday lending, giving the leading
50 payday lenders 12 weeks to change their
business practices or risk losing their licence.
The OFT confirms that letters were issued in a
rolling programme between 6 March 2013 - 3
May 2013, with lenders having two weeks from
the date of the letter to acknowledge receipt
and confirm that they will submit proof of
compliance within a 12 week period. The final
lender’s deadline is 29 July 2013.
The OFT said it has received confirmation from
48 out of 50 lenders that they intend to prove
to the regulator that they are acting within the
rules. The OFT has also announced that it has
opened formal investigations into the practices
of three payday lenders and, in addition, three
payday lenders have had their licences revoked
since the review of the sector in March.
The OFT is expected to announce shortly
whether it will refer the payday market for an
investigation by the Competition Commission.
For further information please contact us:
E: [email protected]
W: http://www.experian.co.uk/compliance
Please note that this document should not be taken as legal advice. Its purpose is simply to raise awareness
of regulatory developments, promote compliant activity and best practice. If you have any legal concerns,
you should seek independent legal advice.
To improve standards of compliance with
payday lending codes, the Consumer Finance
Association, which represents short-term
lenders, set up an independent body to oversee
standards in the payday lending market. The
Short-term Lending Compliance Board (SLCB)
is responsible for supervising a monitoring
and compliance programme. The SLCB will
also have the power to sanction lenders for
non-compliance and refer them to the OFT
and, from April 2014, the Financial Conduct
Authority.
[i] iNFOBOX
[1] HM Treasury & BIS Consultation:
https://www.gov.uk/government/
uploads/system/uploads/attachment_
data/file/188407/consult_transferring_
consumer_credit_regulation_to_fca.
pdf.pdf
[2] FSA Consultation:
http://www.fsa.gov.uk/static/pubs/cp/
cp13-07.pdf
[3] Experian white paper: Counting
the hidden costs of SEPA migration:
http://www.experian.co.uk/payments/
campaigns/winning-with-sepa-wthexperian.html
[4] Experian’s SEPA data conversion
service
http://www.experian.co.uk/payments/
products/data-conversion-service.html
[5] OFT Payday Lending
Compliance Review
http://www.oft.gov.uk/shared_oft/
Credit/oft1481.pdf
© Experian, 2013.
The word “EXPERIAN” and the
graphical device are trade marks
of Experian and/or its associated
companies and may be registered
in the EU, USA and other countries.
The graphical device is a registered
Community design in the EU.
All rights reserved.