Speaking at the National Association of Commercial Finance Brokers annual expo conference in Birmingham today, the Financial Conduct Authority told brokers that if they want to conduct regulated credit broking they must ensure that all regulated leads they receive come from regulated introducers with Consumer Credit Act permissions.
The clarification means that commercial brokers conducting regulated credit business will no longer be able to accept regulated leads from introducing networks of builders, developers, accountants and solicitors unless the introducer either qualifies for an exemption or holds credit broking permissions themselves.
Solicitors and accountants with ICAW membership do qualify for an exemption.
Baljit Bhamra, manager of consumer credit authorisations at the FCA, said: “Unregulated credit brokers will need to apply for consumer credit permissions in order to be able to pass leads to a regulated broker by way of business.
“If you don’t apply for permissions and continue to do this, you might find that lenders will not deal with you and start to remove you from their panels.
“There is a repercussion for failing to apply for the right permissions and continuing to conduct regulated credit broking. We will investigate.”
Stephen Johnson, joint chief executive of Shawbrook Bank, said: “I passionately believe that this introducer challenge is the biggest one we face with these changes.”
From the 21 March all firms and persons carrying out regulated credit broking – advising an individual or sole trader on consumer credit finance – must have applied for CCA permissions from the FCA after the Office of Fair Trading closed and handed over supervision responsibility for consumer credit the FCA last year.
The FCA also told NACFB audience that firms must ensure they have everything ready for their CCA applications before submission.
Bhamra said: “Incomplete applications will require us to request further follow on documentation which will lead to delays. If it takes you four weeks to supply what we have asked for it will prompt us to consider why it is not available or to question whether you should receive authorisation.”
She added that the most common application failings were around which permissions were necessary, full disclosure of trading names, follow on documentation, insufficient level of detail in the business plan and insufficient time.
