FCA pledges better communication after authorisation deadline breach

by: Carmen Reichman
  • 25/07/2016
  • 0
FCA pledges better communication after authorisation deadline breach
The Financial Conduct Authority (FCA) has made pledges to improve its communication with firms applying for consumer credit authorisation after it breached its statutory deadline for processing the requests.

The regulator promised firms it will acknowledge all communications within two working days and respond within 10.

It will also assign each applicant a single case worker who will update the firm on the status of its case at least once a month.

Finally, if asking for additional information, firms will be given clear submission deadlines.

The pledges came after the regulator breached its 12-month authorisation deadline in 118 cases, with a further 200 pending, and had received negative feedback from firms over its handling of the process.

The FCA took over the regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014, when it introduced new licences for firms under a more stringent regulatory framework.

Between then and the end of March the regulator said it received about 37,000 applications for authorisation.

The FCA intends to make a decision on complete applications within six months, or anything up to 12 months if it’s incomplete.

But despite its aim to allocate cases as quickly as possible, it estimated it will have missed its one-year deadline in about 1% of cases by September. So far it has closed 87% of applications.

Firms already holding permissions from the OFT at the time of the regulation switch-over were given an interim licence by the FCA to allow them to continue trading while applying for full permissions.

The regulator said it had decided to prioritise applications from new entrants to allow them to start trading as soon as possible. These included debt management firms and high-cost short-term credit firms.

The FCA said the length of time taken to determine applications can be impacted by a number of factors, including the number of complex cases from higher-risk sectors, such as the commercial debt management and high-cost short-term credit sectors, or how incomplete an application is when it is submitted.

Trade body for the asset, consumer and motor finance sectors, the Finance & Leasing Association, welcomed the regulator’s move.

Director general Stephen Sklaroff said: “We have been discussing with the FCA our members’ concerns over aspects of the authorisation process, and we welcome today’s announcement by the FCA of a set of commitments designed to improve the process and ensure better communication with applicants.”

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