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Education Briefing Consumer credit and education institutions - the journey to the FCA

  • United Kingdom
  • Education - Briefings

19-08-2014

Introduction

If your institution provide arrangements for students and other payers of your fees such as employers to pay fees by instalments it is likely that the institution will need a consumer credit licence. If your institution provides advice to students on how to manage their finances it may also need to be authorised to provide debt counselling. Institutions therefore need to be aware of the changes to the regulation of consumer credit and financial advice that came into force on 1 April 2014.

From 1 April 2014, the Financial Conduct Authority (“the FCA”) has taken over responsibility for regulating consumer credit and related activities from the Office of Fair Trading. 

The operational objectives of the FCA are to secure an appropriate degree of protection for consumers; protect and enhance the integrity of the UK financial system; and promote effective competition in the interests of consumers.  For this purpose students will be treated in law as consumers. There is a deep focus from the FCA on the governance and culture of regulated organisations, with the FCA indicating that “poor governance is a strong indicator of more significant problems”. 

From April organisations that undertake consumer credit activity have been  subject to FCA rules and conduct standards including: the FCA’s principles of business, which establish the core behavioural principles that the FCA requires from organisations; high level standards on how organisations should organise and manage their affairs (e.g. the approved person regime and Senior Management Arrangements, Systems and Controls (SYSC)); and detailed conduct standards relating specifically to consumer credit.

The FCA has indicated that it will not take enforcement action from 1 April to 1 October 2014, to enable organisations to get used to the new regime and its requirements.  However, now is the time, if you have not done so already, to take steps to ensure that your institution has the right culture, governance, systems and controls to meet the requirements of the new regime.

Our team

Eversheds is uniquely placed to help your institution move seamlessly to the new regulatory regime. 
With a multi-disciplinary team consisting of our leading consumer credit experts and specialist consultants with deep expertise in governance, risk and compliance in the education sector, we can ensure that your institution knows what is required of it as well as provide practical advice, support and guidance on the ground to implement any necessary changes.
 
How we can help

We can help with the following:

1. Understanding the new regulatory regime - what is required of you and your institution.

Transitional arrangements; permissions; timescales; new regulatory rules and conduct standards; SYSC; FCA’s approach to regulation.

2. Your business model and strategy

Helping you to design, revise and refresh your business model and strategy to ensure that the interests of students and other users of your services are at the heart of how your institution is run.  Assessing and identifying areas of potential conduct risk.

3. Corporate governance, culture and treating service users fairly

Working with you to assess how effectively your institution identifies, manages and reduces conduct risks including the role of the senior management team and governing body; where required, helping you implement the right culture and “tone  from the top” and design and implement appropriate frameworks and controls.

4. Processes for developing consumer credit and debt counselling arrangements

Assessing whether your processes are compliant with the new rules and regulations and meet your service users’ needs.  Assisting you with design and implementation of required changes.

5. Complaint handling

Assessing the effectiveness of your team in handling complaints about consumer credit and debt counselling and, if necessary, helping you design and implement changes to your current model.

6. Risk functions

Assessing the capability of your current risk function and framework in relation to  activities regulated by the FCA and helping with the design and implementation of any changes that are required. 
 
7.  Supervisory and enforcement regime

Helping you with: FCA reporting arrangements; the thematic approach to supervision; what to expect from the supervisory regime; and how to build the relationship with the FCA.

Providing you with an understanding of the enforcement regime.

8.  Legal and compliance teams

Assessing the current operating model for your compliance team and any in house legal team and assisting you with any changes required. 

9.  Approved persons training 

To include the current regulatory climate and the FCA’s focus on senior management accountability and the “tone from the top”; the role of the governing body; the Fitness and Propriety test; responsibilities of approved persons; key competencies for Significant Influence Functions (SIFs) roles; FCA’s approvals and authorisations process for SIFs; introduction to the FCA’s supervisory regime; the FCA’s disciplinary jurisdiction and the personal liability of approved persons for regulatory misconduct.

For more information contact

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