Poll
Over 9,700 consumer credit firms leave the sector
9,740 firms left the consumer credit sector after their interim permissions lapsed or were cancelled, according to data from the Financial Conduct Authority (FCA).
Of the 33,699 firms that were eligible for interim permissions, 15,372 saw their interim permissions lapse or were cancelled, 5,356 became appointed representatives and 276 reapplied.
The data, published in the February edition of the FCA’s Data Bulletin, refers to all applications as at the end of September 2015.
The FCA found that 61% of the firms did not pursue their application for interim permissions because they either considered that authorisation was not needed or they intended to operate in the consumer credit market via another company.
Of those that left for cost reasons, the majority said they only carried out a limited amount of consumer credit activities and therefore the authorisation process was not worthwhile – a view supported by the Finance and Leasing Association (FLA).
Fiona Hoyle, Head of Consumer Mortgage Finance at the FLA, told Loan Talk: “It was clear from the outset that many firms had consumer credit licences they didn’t use, and the FCA’s approach is that firms shouldn’t hold permissions for business they don’t carry out.
“Therefore, the authorisation process is now flushing these out.
“So far, those firms deciding not to opt for authorisation tend to be brokers undertaking very little consumer credit business, so the regulatory costs aren’t worth it.”
When contacted by Loan Talk, the FCA declined to provide further comment.
In total 21,670 firms were authorised as at the end of September 2015 while 28 were refused.
In May 2014, the FCA had told all firms with interim permissions when their application period would be and prioritised those sectors that posed the greatest risk to consumers.
The Mortgage Credit Directive comes into force on 21st March this year.
The FCA currently only has one application period left open which will close at the end of March.
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