Consultation on Consumer Credit Regulatory Returns
FCA Consultation on New Regulatory Reporting for Consumer Credit Firms
The Financial Conduct Authority (FCA) is currently consulting on its proposal to introduce a new regulatory reporting return for consumer credit firms involved in Credit Broking, Debt Adjusting, Debt Counselling, and Providing Credit Information Services. The goal is to improve the quality of information collected from firms, enabling the FCA to better understand these firms’ activities and proactively supervise them to identify and prevent risks to consumers.
Why the FCA is Consulting
The FCA’s primary objective is to enhance consumer protection by gathering better quality data, allowing them to act faster in addressing potential risks. The new reporting structure will be tailored to each firm’s specific business model and activities, using industry-standard terminology for better clarity and accuracy in responses.
This consultation is crucial for firms engaged in:
- Credit broking
- Debt adjusting
- Debt counselling
- Providing credit information services
- Firms advising or representing the above
Proposed Changes
The FCA is introducing a new reporting system that is specifically designed to align with the unique business models, activities, and permissions of each firm. This updated system includes a “branching logic” feature, which ensures that firms only need to respond to questions directly relevant to their operations. This streamlined approach is intended to reduce the number of ad hoc data requests from the FCA and significantly improve the accuracy of the information collected.
Reason for the Changes
The current reporting system, introduced in 2014, no longer meets the needs of today’s consumer credit market. Over the years, business models have become more complex, and the introduction of the Consumer Duty has raised the bar for consumer protection standards. The FCA recognizes these changes and aims to gain a clearer understanding of how firms operate while ensuring they are using their regulatory permissions appropriately.
Expected Outcomes
The new reporting system is expected to provide more accurate, detailed, and relevant data from firms. With better-quality information, the FCA can identify firms that pose potential risks to consumers much more quickly. This will make regulatory oversight easier and allow the FCA to intervene earlier, preventing harm to consumers and improving the overall efficiency of the regulatory process.
How the Consultation Works
The consultation will run until 31 October 2024, and the FCA encourages feedback from all firms in scope. Firms can respond via an online form or by emailing CP24-19@fca.org.uk. As part of this consultation, the FCA is providing a prototype of the proposed return, which allows firms to preview and test the system before full implementation. This prototype is designed to demonstrate how the FCA’s “branching logic” will work, ensuring firms only answer questions relevant to their operations.
What’s Next?
The FCA aims to publish the final policy statement by Spring 2025, reflecting the feedback received during the consultation period. The new return is expected to enhance regulatory oversight by ensuring accurate reporting of firms’ permissions and activities.
Background on FCA’s Regulatory Approach
Since taking over consumer credit regulation from the Office of Fair Trading in 2014, the FCA has been continually adapting its approach to meet the needs of a dynamic market. Changes in fee structures, staff remuneration, and consumer protection standards under the Consumer Duty have prompted the FCA to rethink how they collect data.
The new reporting system will ask firms about their current use of permissions, helping the FCA to update the Financial Services Register and better identify firms that may no longer be using the correct permissions.
By responding to the FCA’s consultation, consumer credit firms can ensure that the proposed new regulatory returns align with their business models while contributing to a safer, more transparent consumer credit market. The CP24/19 consultation paper can be found on the FCA’s website.
Help with FCA Regulatory Reporting
Navigating FCA regulatory reporting can be complex, especially with evolving requirements for consumer credit firms. Alumni Compliance offers expert solutions to help your business meet these stringent FCA reporting obligations. Our services streamline data collection, ensure timely submissions, and provide tailored support to keep you compliant with the latest regulations. By partnering with Alumni Compliance, you can confidently handle regulatory returns for credit broking, debt counselling, and more, reducing the risk of penalties while enhancing operational efficiency.