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Changes to consumer credit licenses

From April 2014, the government is changing the way consumer credit licenses work. Find out what it means for small businesses that offer credit.

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In April next year, the Financial Conduct Authority (FCA) takes over many of the powers that use to rest with the Office of Fair Trading (OFT). In theory no problem. However, the Government is using this change of powers to make their own changes to the way Consumer Credit Licences work. Find out what this means for small businesses. If a business sells goods or services on credit, offers goods for hire or provides debt counselling or debt adjusting services to consumers, you almost certainly need to be licensed by the OFT and, from next year, the FCA. What does the change mean for these businesses? Any business that has or needs a consumer credit license, regardless of how long they have paid for, is being told that as the OFT powers change to FCA, they will have to buy an interim permission to continue to be licensed from 1 April 2014. That interim permission will cover them until the FCA set their new fee. The interim permission costs £350 but is subject to a 30% discount if purchased before the end of November. The government has said there will be a rebate to consumer credit licence holders to reflect the closure of the OFT regime at 31 March 2014. This is designed to ensure that the cost of the transfer of regulation is proportionate. However, we do not yet have the details of this rebate (they are expected in the autumn) or who is eligible for them. The second issue is that the FCA have not yet released details of the fee, though they are due to consult on this shortly. In response to this, we've asked them to extend the deadline for the 30% cost of the interim permission until such time they publish their new fee, so that businesses who will be costed out by it don't waste money on the interim permission license. We hope for clarity soon, which we can then pass on to members affected by this. In the meantime, we have called on the Government to set out full details in their Autumn Statement, due 4 December. If this issue is affecting you, please do contact the Forum's Head of Policy at Alex Jackman at policy@fpb.org.

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