The FCA is planning to significantly change the way consumer credit firms report on certain regulated activities. On 12 September it published proposals in relation to new regulatory reporting requirements for all Credit Broking, Debt Adjusting, Debt Counselling and Providing Credit Information Services activities.
The FCA says that the current reporting system, introduced in 2014, is too broad and non-specific for the current market. Over the last 10 years, the market has seen fundamental changes to the business models used by firms, methods for staff remuneration and incentives, and credit broker fee structures;therefore data requirements have also shifted. Additionally, the FCA now needs to collate information in a different way in order to monitor firms' compliance with the ever pervasive FCA Consumer Duty. The FCA wants to be able to collect better quality information, with a view to targeted intervention where required to protect consumers.
Although the changes are aimed at enabling the FCA to identify those firms engaged in higher risk activities, the proposed requirements will affect all firms with the broad range of permissions. The FCA has estimated around 30,000 firms will be affected, including firms with Limited Permission to carry out the relevant regulated activities and not-for-profit bodies.
The newLimited Permission reporting requirements will sit alongside the current annual CCR007 return. The new report will comprise five mandatory sections plus subsequent questions that are customised based on each firm's specific permissions. Detail will be required around the demand for consumer credit services, referrals, remuneration and source of funding, but requests for arbitrary information relating to activity permissions that a firm does not hold will be eliminated. As part of the consultation, the FCA have shared a prototype of the proposed return, and they strongly encourage all firms with permissions for the relevant activities to test it.
The FCA's consultation poses very sensible questions to firms such as:
- Do you agree with the questions, or data, proposed to be collected (e.g. the proposed format of, or guidance around, the data)? Please provide details.
- Will any of the proposed questions, or data, cause practical issues (e.g. requiring data you don't currently, or would struggle to, collect)?
- If you do not currently collect specific information which is included in these proposals, how difficult would it be for you to start collecting this data?
- What resource would you allocate to the collation and reporting of this data? Do you have an early indication of the likely scale of costs involved?
The consultation can be read in full here and closes on 31 October 2024, with the final Policy Statement promised during Spring 2025.
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