News release

SRA updates consumer credit work guidance

The Solicitors Regulation Authority (SRA) has updated its guidance for firms involved in consumer credit work.

Regulating consumer credit work passed from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) on 1 April. Law firms engaged in consumer credit work had until this point been covered by The Law Society's group licence. Now, however, such firms should have assessed what licensing needs they have and approached the FCA for the relevant authorisation.

The SRA made the necessary changes to its Financial Services (Scope) Rules last week. Now, the guidance has been updated to continue helping firms to work out how the change affects them. Guidance was first published last year after the licensing arrangements were announced.

Crispin Passmore, SRA Executive Director for Policy, said: "The transfer of regulation has, and continues to be, a complex process. We always want to help firms to stay compliant and we produced our initial questions and answers to inform firms on the issues they would need to consider. "Now that we have further information about the regulation of consumer credit work, we have updated that guidance. And as further information is made available to us, we will continue to build on the guidance."

The guidance includes information for law centres who relied on the group licence, reference to the OFT’s licence fee rebate scheme and information about delayed/staged payments of professional fees. From September, the SRA advised firms to consider whether they meet the criteria set out in Part 20 of the Financial Services and Markets Act 2000 (sections 327 and 332(4)) (FiSMA) and are therefore exempt from FCA authorisation.

Where the criteria are not met, firms should have applied to the FCA for interim permission, or cease to carry on consumer credit activities. Firms should already be familiar with the Part 20 regime in relation to financial services, but this will now also be relevant to consumer credit activities. Firms now carrying on consumer credit activities without interim permission from the FCA or falling within the Part 20 exemption will be in breach of FCA regulations.

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