#LEND360 ● LEND360.org John Gordon, FactorTrust Jeannette Burgess, Walker Morris, LLP Marcus Vernon, Realex Payments #LEND360 ● LEND360.org UK Regulatory Overview • Financial Conduct Authority took responsibility (from Office of Fair Trading) for Consumer Credit from 1st April 2014. – They have stronger powers and more resources available • Lenders must adhere to the FCA’s rules relating to conduct of business. Published in Feb 14, they cover general business management, systems and controls, treating customers fairly, specifically – Affordability assessments, limits on rollovers, limits on use of Continuous Payment Authority (CPA) to take payment and risk warnings displayed prominently by lenders – FCA is also looking back at previous lender activities / processes UK Regulatory Overview • Consultation Paper 14/10 – Statutory duty to impose a price cap (proposed £24 per £100 over 30 days, never pay back more than double the principal). – Data Sharing - Expect lenders to be reporting in ‘real-time’ to 2 CRAs by Nov 14, already gathered information on lender activity from CRAs. • UK Competition Commission (now Competition and Markets Authority) asked to look into the market and lenders. Increased scope to include lead generators. – They state that there is an adverse effect on competition and proposed remedies including price comparison sites, increased transparency on costs & charges and the role of lead gens. • Application authorization periods starts Dec. 1, 2014 Panel Questions Q: Do you expect any additional regulatory changes by the FCA from their consultation period, or is it expected to be what they initially communicated? Panel Questions Q: What are the some of the important dates and activities that lenders need to be aware of going forward? Panel Questions Q: What has the impact so far from the FCA guidance to the HCSTC (high cost short term credit) industry in the UK? Panel Questions Q: Do you see new lending products being developed or will existing one month (payday) products survive? Panel Questions Q: What’s the real-time credit reporting guidance for HCSTC lenders the FCA announced from their recent consultation communication? Panel Questions Q: What are HCSTC lenders doing to address realtime credit reporting and when does this need to be done? Panel Questions Q: Do you think real-time reporting will become compulsory for HCSTC and potentially other lending areas? Panel Questions Q: Once these regulatory changes take effect on January 2, 2015, do you think regulatory noise in the HCSTC industry will quiet down a bit? Panel Questions Q: How have all the regulatory changes impacted the profitability of existing UK lenders? Panel Questions Q: How does the panel anticipate the investigation by the CMA will affect lead generation? Panel Questions Q: What is the wider impact of the recent announcement that Wonga will be writing off £220m of customer’s loans as it was not considered that their affordability assessments had been sufficient? Panel Questions Q: In your opinion, what will the future HCSTC market look like in the UK? What will be the impact on consumers? Panel Questions Q: What are the advantages / disadvantages for new HCSTC lending entrants into the UK market?