Comments from ACCA to the Financial Services Authority, April 2013.
ACCA currently holds an OFT Group Consumer Credit Licence. The focus of ACCA’s response is concerned with the proposals concerning exempt professional firms and authorised professional firms, and is dealt with under question 10.
The process of transfer to the new regime is potentially complex, and we welcome the intention stated in the overview to the consultation paper, that the FSA will provide support in the form of targeted communications to the firms affected, presentations and plain language guidance.
In our opinion, the proposals generally strike the right balance. Proportionality is key in any regulatory regime to ensure sufficient protection without being overly burdensome.
In our opinion, the proposals appear reasonable.
The new regime should aim to promote competition and choice in the consumer credit market, and we believe that the proposals advance this aim.
We believe that the proposals are appropriate.
Yes, we agree that the proposals appear reasonable.
Yes, we agree that the proposals appear reasonable.
Yes, we agree that the proposals appear reasonable.
Yes, we agree that the proposals appear reasonable.
Yes, we agree that the proposals appear reasonable.
ACCA is in agreement with the proposal that the consumer credit activities of professional firms currently covered by a group licence should come within the FSMA Part 20 regime if possible. ACCA would put into place appropriate rules, approved by the FCA, by 1 April 2014 to enable the majority of its members to continue to carry on activities currently falling within its OFT group licence.
However, the proposals within the consultation document do not indicate how consumer credit activities should be performed in order to fall within the definition of ‘incidental’. Currently, without clarity in this respect, there is uncertainty regarding how many professional firms would be required to apply for direct authorisation from the FCA.
It is not possible for a firm to be both authorised by the FCA and exempt under Part 20, and so any firm that is, in future, required to be fully authorised for consumer credit activities would be required to seek full authorisation in respect of all its FSMA-regulated activities. We acknowledge that there is a benefit in streamlining regulation in this way – so that the FCA is responsible for regulating ‘whole firms’ that are required to be authorised by it. However, the perception of any firms that currently fall within the Part 20 regime in respect of Exempt Regulated Activities would be that the requirement of full authorisation is disproportionate and simply an unintended consequence of ‘streamlined’ consumer credit regulation. The additional costs to such firms – in terms of administrative burdens and fees – must be kept to a minimum in order not to outweigh the benefits to consumers.
A situation that might have been overlooked is that of a professional firm that is authorised for investment business by the FCA that currently falls within the group licensing regime. Such a firm would, in future, be required to seek full authorisation from the FCA in respect of incidental consumer credit activities. Similar considerations with regard to proportionality and costs to such firms apply.
Yes, we agree that the proposals appear reasonable.
Debt management firms themselves will be better placed to provide views on this question.
We are not aware of any other such measures.
We agree that the proposals appear reasonable, although the timeframe is short. Resources must be made available to communicate with firms and professional bodies throughout the transition to the new regime.
Yes, we consider it appropriate to have consistency
We believe that voluntary codes can complement the rules and Principles for Business of the FCA, and it will surely be of benefit to consumers for the FCA to work with trade associations to ensure a coherent approach, providing clarity to both consumers and firms. As part of this, trade associations’ codes should be required to highlight that in the case of inconsistency or doubt, the rules and principles of the FCA will prevail.
Looking beyond such alignment of regulations, important consumer protections within industry codes should be introduced into the FCA’s rules and guidance, while not overlooking the benefits of principles-based standards.
ACCA has its own rulebook and standards with which any member of ACCA and anybody licensed by ACCA (for example insolvency practitioners) must comply. These are, and would remain, independent of FCA rules and guidance.
Yes. Standards must be proportionate to the nature and risk of the activity being undertaken.
Yes, we agree that the proposals appear reasonable and proportionate.
ACCA has no comment on this.
Yes, we agree that the proposals appear reasonable.
The proposed approach must ensure that the supervision is proportionate to the size and type of firm and the risk attached to the activities it is carrying out.
No, we have no comment on this.
No the proposed approach appears reasonable.
No, we have no comment on this.
The workload of the FCA will be intense during the interim permissions period, and we note that the costs relating to interim permissions will be recovered through one-off interim permission fees. Similarly, the intention appears to be to recover the FCA’s costs from those organisations that it will regulate. The implication is that the fee structure will be complex, and we would expect a focus on transparency when the FCA consults on fees in October/November 2013, and subsequently publishes its business plan.
Yes, we agree that the proposals appear reasonable.
It is noted that the costs associated with exempt professional firms have not been included in the aggregate cost estimates, and the effects on these firms will be considered in the further consultation in the Autumn. Account should also be taken of the costs to professional bodies of drafting and implementing new regulations.
Yes. ACCA is not aware of any other impacts.
No, we have no comment on this.
ACCA is generally in agreement with the proposals. It has a particular interest in how professional accountancy firms and insolvency practitioners will be dealt with under the transfer of the regulatory regime from the OFT to the FCA. These are largely dealt with under question 10, but ACCA would welcome the opportunity to contribute to further consultation.