The regulation of solicitors’ consumer credit work by the Financial Conduct Authority (FCA) has been postponed again.
The FCA has agreed to a Solicitors Regulation Authority (SRA) request extent the current transitional arrangements until 31 October 2015; they were due to run out on 1 April.
By then it will have been more than a year since the transitional provisions were meant to have ended.
In the meantime, the SRA and Law Society will jointly instruct leading counsel to provide a clear definition of what falls within the scope of consumer credit work. The Law Society argues that thousands of firms could be affected, saying it extends as far as allowing clients to pay by installments.
SRA board chair Enid Rowlands said: “We are committed to finding the best possible solution for law firms and the users of legal services. Moving responsibility for consumer credit regulation from the Office of Fair Trading to the FCA [which occurred on 1 April 2014] is an opportunity to review how oversight of the work of law firms engaged in various forms of consumer credit activity should be delivered.
“We have had open, constructive and positive discussions with the FCA about how our differing models of regulation can work together to provide proportionate and effective protection. However, this is a complex and important area and we felt more time was needed to allow the options to be properly and thoroughly explored. The FCA has agreed, and we will continue to work closely with them.”
Solicitors’ firms undertaking consumer credit work were regulated under the Office of Fair Trading through a group licence granted to the Law Society. There is no equivalent group licence scheme at the FCA. This led to the SRA’s proposal to shift regulation to the FCA, which had a very mixed response.