Consumer Credit seminar

1. Consumer Credit:
Life after FCA Authorisation
Prem Griffith
Managing Consultant at Bovill
September 2016
Greg Stevens
CEO of CCTA
Richard Ellison
Partner at Shakespeare Martineau

2. Prem Griffith
Managing Consultant at Bovill

3. 3
FCA and consumer credit - what’s next?
 FCA’s supervision model
 When thing’s go wrong – FCA’s approach and powers
 Anticipated future rule changes and areas of regulatory focus
 What should you be doing?

4. 4
FCA threshold conditions (reminder)
LEGAL STATUS
LOCATION OF OFFICES
EFFECTIVE SUPERVISION
APPROPRIATE RESOURCE
SUITABILITY
BUSINESS MODEL
Authorised firms must meet the threshold conditions at all times

5. 5
FCA rules
High level standards
Prudential standards
Business standards
Regulatory process
Redress
Specialist sourcebooks
& guides
The minimum standards applying to
all firms
Capital adequacy, risk management
and other prudential requirements
Detailed requirements relating to the
way firms conduct their business day
to day
Manuals describing the FCA’s
authorisation, supervisory and
enforcement functions
The processes for handling complaints
and compensation
Sector and topic-specific guidance
for firms

6. Supervision model Number of
firms
FCA
contact
Circa 30-50
firms, e.g.
HSBC
Nationwide
Dedicated
Team
Circa 50k
firms – i.e.
pretty much
everyone else
Firm
Contact
Centre
6
FCA firm classification
Flexible portfolio
Fixed
portfolio

7. 7
FCA supervisory framework
PILLAR 1 PILLAR 2 PILLAR 3
Proactive(scheduled)
firmsupervision
Issuesandproducts
supervision(thematic)
Event-driven,reactive
firmsupervision
FCA SUPERVISION

8. 8
FCA approach
Data
• Reporting obligations
Intelligence
• Complaints
• Whistle-blowers
• Consumer bodies
Informal means first
• Gathering data
• Corresponding with
firms where issues
are identified
Early intervention

9. 9
Supervisory / enforcement tools
 Use of attestations
 Increases personal accountability
 Skilled Person (s166) reviews
 Enforcement powers
 Private warning
 Restrictions on business
 Withdraw (firm) authorisation
 Public censure
 Suspension (individual)
 Prohibition (individual)
 Prosecute (individual)
 …and of course hefty fines

10. 10
Recent examples of supervisory intervention

11. 11
Areas of regulatory focus
 Responsible lending: affordability and creditworthiness
 Arrears and forbearance
 Staff incentives / remuneration
 Vulnerable customers
 Culture
 Poor treatment of existing customers

12. 12
Future rule changes
 Review of high-cost short-term credit price cap
 Retained provisions in the CCA 1974 moved to CONC
 Senior Manager Regime extended to all firms in 2018-19

13. 13
Senior Managers and Certification Regime
Senior
Management
Functions
Certification Regime
Individuals
All other staff
FIRM PERSONNELFIT
PRA/FCA
Assessment
Firm
Assessment
ConductRules

14. 14
What you should be doing….
Embedding
 Establish your compliance framework
 Make sure your Board has the right MI and attitude
 Identify relevant regulatory developments
 Make sure your processes consider compliance e.g. new product
development
Day to day compliance
 Financial reporting and non financial reporting
 FCA notifications
 Applications – variations of permission, approved persons etc.
Testing state of compliance
 Regular compliance monitoring to identify issues early
 Check policies and procedures to ensure they are fit for purpose
 Test employees to ensure they have the right knowledge

15. Of course, Bovill can help…

16. Consumer Credit:
Life after FCA authorisation
Richard Ellison
Shakespeare Martineau LLP

17. • Life post interim permission
• The future of the Consumer Credit Act
• The CCA Call for Input
• The Senior Managers & Certification Regime
Richard Ellison: Shakespeare Martineau LLP

18. • Areas of FCA concern
• How are the FCA coping?
• Interim permission is only the start
• What can authorised firms expect?
Life post interim permission

19. • Brief overview to date
• CONC: 82 down, 167 to go
• The additional 26 sets of Regulations
The future of the CCA: Where have we come from?

20. • Very limited CONC guidance on the CCA
• 167 plus 26: fit for purpose?
• Practical, sensible and deliverable regulation
• The Call for Input
The future of the CCA: Where are we now?

21. • The Call for Input closed on 18 May
• 1 April 2019 deadline for HM Treasury report
• Prioritising particular CCA provisions for review/early
review
• How best to engage with stakeholders
The future of the CCA: What happens next?

22. • Who will conduct the review?
• Mix of in-house resource and expert Stakeholder
Consultative Group
• Timetable: update on progress by Q4 2016
The future of the CCA: What happens next?

23. • Balancing act: the appropriate degree of protection for
consumers
• Balancing act: avoid imposing disproportionate
burdens on regulated firms
• Balancing act: the greater flexibility and coherence of
CONC as opposed to statute and regulations?
The future of the CCA: What happens next?

24. • Mixed response to 2013 consultation
• At least one FCA interim report/further consultation to
come
• Impact of European Consumer Credit Directive
The future of the CCA: What happens next?

25. • More CONC guidance (but Guidance on enforcing
CCA security)
• Ongoing European Directive compliance
• Consumer protection
• Unfair contract terms guidance
The future of the CCA: What happens next?

26. Senior managers & certification regime
• No more Approved Persons and Controlled Functions
• Already in place for PRA regulated firms
• Focus on individual’s responsibilities for roles they
perform; accountability for their roles; and firms
certifying fitness and propriety
• Timetable for all FSMA authorised persons: during 2018

27. presented by
DWF Legal Update
Stronger Together
Going Forward
Greg Stevens
Chief Executive

28. presented by
END OF AN ERA?
• Soundbite Politics
• Knee jerk reactions
• Onerous regulation
• Lack of dialogue and collaboration
Stronger Together – Going Forward

29. presented by
• Angry World
• Secular Groups
• Connectivity
• ‘Want it now’ sentiment
• Millenials
CHANGING PATTERNS
Stronger Together – Going Forward

30. presented by
CLOSER TO HOME
• Working patterns
• Jobs for life
• Meaningful occupations
• New order
• Bubble mentality
Stronger Together – Going Forward

31. presented by
WHAT DOES IT MEAN FOR CONSUMER
CREDIT?
• Major reliance on consumer spending
• Throw away society
• Style is a moving feast
• Housing market
• Opportunities
Stronger Together – Going Forward

32. presented by
POLITICAL OVERVIEW
• Where are we now?
• Where are we going?
• Why does it matter?
• What are we going to do?
Stronger Together – Going Forward

33. presented by
CCTA ACTION PLAN
• Future of Trade Associations
• Public Affairs agenda
• Policy Committees
• Project Centurion
Stronger Together – Going Forward

34. presented by
STRONGER TOGETHER - GOING
FORWARD
• National Conference 2/3 November
• CCTA 125th Anniversary Year
• Fighting your corner
• Book early to avoid disappointment
Stronger Together – Going Forward

35. 35
Questions?