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«FIRM_NAME»
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Reference: «REGNO»
10 March 2014
Dear «DEARNAME»
Credit-related regulated activities – Important guidance
This information concerns you, and requires a response. Please read this carefully, and respond by 21 March 2014, using the enclosed form, to:
Authorisation
ACCA
2 Central Quay
89 Hydepark Street
Glasgow G3 8BW.
If you prefer, you may scan and email the form to .
Background
ACCA was first granted a group licence under the Consumer Credit Act 1974 by the Office of Fair Trading on 10 April 1979. The licence was subsequently amended to cover the following categories of business:
- Category A Consumer Credit
- Category C Credit Brokerage
- Category D Debt Adjusting
- Category E Debt Counselling
- Category G Debt Administration
- Category H1 Provision of Credit Information Services (including credit repair)
but has always been limited to activities arising in the course of a member’s practice as a Chartered Certified Accountant.
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It has always been the case that firms that engaged in any of the categories of business not covered by the group licence (Category B Consumer Hire, Category F Debt Collecting, and Category I Credit Reference Agency) were required to obtain the relevant standard licence from the Office of Fair Trading (OFT).
What has changed?
From 1 April 2014, the Financial Conduct Authority (FCA) will assume responsibility from the OFT for regulating consumer credit activities. ACCA’s consumer credit group licence will not transfer to the FCA, and there will be no comparable group licensing arrangement. A new framework for consumer credit authorisation has been laid down by Government, which brings ‘credit-related regulated activities’ within Part XX of the Financial Services and Markets Act 2000 (‘the Act’).
The FCA is committed to authorising professional firms under the Designated Professional Body (DPB) regime for these credit-related activities. ACCA is required to have regulations (approved by the FCA) allowing its firms to carry out credit-related regulated activities under Part XX of the Act. This is being effected through a change to ACCA’s Designated Professional Body Regulations 2001.
How does this affect you?
There are various factors to consider and, therefore, ACCA has produced guidance available at:
Essentially, you need to consider whether your firm wishes to:
- register with ACCA as a DPB (specifically to be able to perform credit-related regulated activities);
- seek direct authorisation from the FCA to be able to perform specific credit-related regulated activities; or
- do neither of these things, but refrain from carrying on any credit-related regulated activities.
Whatever your situation, you need to understand which services you are intending to perform, and how you can obtain any authorisation necessary. Failure to obtain the necessary authorisation for the services provided by your firm after 1 April 2014 will be a criminal offence.
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Firms that currently do not rely on the group licence
This might be because you have direct authorisation from the OFT, or because you do not perform any of the activities covered by the group licence. You should consider whether your needs might change in the future, or whether you would gain comfort from a ‘protective’ registration under the DPB regime. (ACCA currently does not charge for DPB authorisation.)
You are required to respond to ACCA (at the address set out above), stating whether you require authorisation to conduct credit-related regulated activities and, if not, what other measures you have put in place. An appendix to this guidance sets out the credit-related regulated activities that will be covered by DPB authorisation. (These are closely mapped to the activities currently covered by the group licence.)
Firms currently taking advantage of the group licence
Now is the time for such firms to consider the services they provide and the services that they intend to provide in the future. Your firm is required to respond to ACCA, stating whether authorisation is required for credit-related regulated activities within the DPB regime and, if not, what other measures have been put in place. When making this decision, you should refer to the appendix setting out the credit-related regulated activities that would be covered by DPB authorisation.
Other considerations
When trying to determine the best course of action for your firm, you should bear in mind the following:
Exempt regulated activities and direct authorisation
A firm cannot perform exempt regulated activities under DPB authorisation while also being directly authorised by the FCA. This becomes a factor to consider if a firm seeking direct authorisation for credit-related regulated activities already carries on exempt regulated investment business activities under the DPB regime. Similarly, a firm that is directly authorised by the FCA for investment business will not be able to gain authorisation under Part XX of the Act for credit-related regulated activities.
Incidentality
Exempt regulated activities may only be provided in an incidental manner. Broadly, the same has been true of consumer credit activities under a professional body’s group licence. However, the meaning of ‘incidental’ is different in each case.
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In respect of the ACCA group licence, consumer credit services must be incidental to the provision of professional accountancy services; under DPB authorisation, credit-related regulated activities may only arise out of, or be complementary to, the provision of other professional services to the same client. This is a requirement of the Act and, although subtle, this difference could mean that a firm needs to review its business model.
Next steps
Further guidance is available from ACCA UK at:
or from the Technical Advisory service on 020 7059 5920. Having read this guidance and obtained any further information necessary, you are required to complete the form enclosed with this document, and return it by 21 March 2014 to:
Authorisation
ACCA
2 Central Quay
89 Hydepark Street
Glasgow G3 8BW
or you may scan and email the form to .
If you are to carry on credit-related regulated activities, you must either elect for DPB authorisation from ACCA or obtain direct authorisation from the FCA.
Achieving direct authorisation from the FCA
If you already have authorisation from the OFT, you will probably already be aware of the process of migration to FCA authorisation. This will involve applying for an ‘interim permission’ or an ‘interim variation of permission’, which is a transitional arrangement to allow the FCA to proceed to the full licensing of firms over a period of time.
Alternatively, if your firm is currently covered by ACCA’s group licence, but you feel that DPB authorisation is either inadequate or inappropriate (perhaps because you already have a licence from the FCA in respect of investment business activities), then you will need to consider how you make that transition. Continuity of authorisation is best achieved by obtaining direct authorisation from the OFT now, and then migrating to FCA authorisation by way of an interim permission.
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Further information is available at:
Yours sincerely
Sundeep Takwani
Director - Regulation
Appendix: Credit-related regulated activities to be covered by DPB authorisation
Firms authorised under ACCA’s Designated Professional Body Regulations will be required to comply with the conduct provisions of the FCA’s Consumer Credit sourcebook as applicable to the credit-related regulated activities being performed or offered by the firm. Firms so authorised may carry on the following activities:
(a)Entering into a regulated credit agreement as lender (article 60B of the draft Regulated Activities Order)
(b)Exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement
(c)Credit broking (article 36A of the draft Regulated Activities Order)
(d)Debt adjusting (article 39D(1) and (2) of the draft Regulated Activities Order)
(e)Debt counselling (article 39E(1) and (2) of the draft Regulated Activities Order)
(f)Debt administration (article 39G(1) and (2) of the draft Regulated Activities Order)
(g)Providing credit information services (article 89A of the draft Regulated Activities Order)
(h)Agreeing to carry on a regulated activity so far as relevant to any of the activities in (a) to (g) above.
Firms may not carry on the following credit-related regulated activities under authorisation by ACCA:
(i)debt collecting (article 39F(1) and (2) of the draft Regulated Activities Order)
(j)entering into a regulated consumer hire agreement as owner (article 60N of the draft Regulated Activities Order)
(k)exercising, of having the right to exercise, the owner’s rights and duties under a regulated consumer hire agreement
(l)providing credit references (article 89B of the draft Regulated Activities Order)
(m)operating an electronic system in relation to lending (article 36H of the draft Regulated Activities Order).
The draft Order is available at: