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The seal of regulatory approval

As members of the Credit Services Association (CSA) encounter the final few weeks before full authorisation is given by the regulator, John Ricketts, vice president of the CSA, explores the numbers yet to reach the finish line.

John    Ricketts

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John    Ricketts
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When the move to a new regulator was first mooted, there was some understandable concern as regards the resource and understanding needed to transition the industry to a new regime under the Financial Conduct Authority (FCA).

A particular concern was the time it would take to obtain formal authorisation, and both the uncertainty and the additional investment that a business would have to go through as a result. While businesses have indeed had to meet the increased cost in compliance, some of the initial concerns, at least, have not been realised. The authorisation process has continued at pace, and accelerated quite dramatically in recent months. As at July 4 2016, 89 (82 percent) of the 109 CSA full members that applied for full FCA authorisation post interim permission are now fully authorised.


To put that into context, that number has increased significantly from the 52 percent when we last looked at the figures in April of this year.


The end in sight

Looking at the statistics as part of the CSA’s quarterly Data Gathering Initiative (DGI), there are now only 20 CSA full members that are still waiting for the final nod from the FCA to bring the authorisation process to a close. Of those 20, seven are debt buyers, and the balance are debt collection agencies or similar. The rush to the finishing line is not immediately explained, but perhaps it has something to do with news released by the FCA that its consumer credit authorisations team will be disbanded by the end of September to be replaced by a team that is described as being non-sector-specific.


The consumer credit authorisations team was set up specifically to deal with the expected large volumes of firms applying for authorisation as part of interim permission. Now almost all of those with interim permission are being processed, the specific team will no longer be needed. The new team will still deal with consumer credit applications from new entrants.


Number crunching

The task has been long and arduous: out of the CSA’s 270 full, foundation and affiliate members, 76 percent (206) originally registered for interim permission with the FCA in April 2014 and 64 (or 24 percent) did not. However, of those 206 that did, 11 (five percent) subsequently cancelled their interim permission and a further 56 (27 percent) did not eventually submit a regulatory business plan and allowed their interim permission to lapse.


The net result was that only 139 (68 percent) of the 206 members who originally registered for interim permission actually progressed to apply for full FCA authorisation.


Of the 139 that submitted regulatory business plans, we now have in total 110 (79 percent) across the line with full authorisation, and the remaining 29 (of which 20 are full members) still at interim permission stage. The pace of authorisations has undoubtedly slowed; after a flurry of activity that saw 47 members authorised during March, April and May, only four were authorised in June. The FCA may, of course, have been distracted by recent geo-political events. I would be surprised if it had not, in keeping with most of the country.


Let us hope, however, for one more concerted push to the finishing tape, to allow all of our members to enjoy the seal of regulatory approval.

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