Background

Before April 2014 consumer credit was regulated by the Office of Fair Trading (OFT) in the UK. This was not an onerous regime and it did not impact firms greatly. This all changed when the FCA started to oversee all consumer credit providers. Firms are now subject not just to the CONC handbook (in effect the Consumer Credit Act 1974) they are also subject to all other relevant handbooks, i.e. SYSC, APER, DISP, etc. The FCA takes a much more intrusive approach to enforcement than the OFT did. This means that the level of oversight which firms need to dedicate to their credit broking activities has increased. We have worked in regulated businesses for over 20 years and are in a good position to assist.

Regulatory permissions

The permissions regime put in place in April 2014 can be complex and difficult to navigate especially if a retailer wants to vary its permissions. We can assist in determining which permissions are needed as well as handling new applications with the FCA.

Board governance

Under the FCA regime firms are expected to have appropriate governance arrangements between senior management and the day-to-day systems and controls of the operation. There are several ways in which this can be done. We can assist you in designing systems and controls which are proportionate and fit for purpose under the rules.

Product governance

Another key regulatory requirements is that retailers introduce products for which there is genuine customer demand and benefit. This is not easy to establish with some finance products. Therefore we can assist in documenting and establishing the benefits of any new finance products so it can stand up to any subsequent FCA scrutiny.

Marketing and financial promotions

This is another area which has been tightened up greatly under the new regime. All financial promotions must be clear, fair and not misleading. This provision leaves plenty of room for judgment. We can help you to design appropriate financial promotions and marketing material which will not fall foul of this requirement. We will also be able to alert you to some of the obvious claims that were being made years ago about savings from buying certain goods which will not pass muster under the FCA regime.

Sales process

This is the main areas where credit brokers fall foul of the rules, i.e. by embedding sales processes which have a high risk of mis-selling or other customer detriment. We can review and advise on current processes and suggest ways in which the process can be made more effective and less risky. This includes both in-home and in-store selling as well as over the phone and on-line sales.

We can also advice on how sales teams should be remunerated to avoid perverse incentives and bad outcomes for customers.

Quality assurance

Many retailers do not consider having an element of quality assurance (QA) on their sales functions – perhaps seeing it as an avoidable cost. Far from being a pointless overhead a suitable QA process will not only alert you to customer views at an early stage but will also allow you to detect poor sales practices or bad customer outcomes before they have the chance of becoming systemic. We can advise you on designing a proportionate QA process which is not onerous and will give you the maximum feedback for minimum investment. This includes assembling all documentation needed for FCA purposes.

Complaints handling

Complaints are often seen as just an inevitable costs of doing business. However, they are in fact a valuable indicator of potential systemic issues and, if investigated correctly, can prevent the emergence of bigger issues at a later stage. We can assist not just with how to conduct proper investigations but also how to document your processes and procedures in a suitable way. We can also assist with proper root cause analysis which will generate valuable insight for the retailer.