Headache for 1,000 firms with SRA poised to pull out of consumer credit work


SRA

SRA: FCA rules do not fit into its regime

The Solicitors Regulation Authority (SRA) has said it may have to stop regulating consumer credit work, such as debt collection, from next April.

The regulator said it was aware that around 1,100 firms were involved in debt collection, while other consumer credit work included negotiating terms with creditors for settlement of divorce debts, or amending information held by credit reference agencies.

In a statement yesterday, the regulator said that transitional arrangements replacing a group licence it previously held from the Office of Fair Trading, would expire on 1 April 2015. The original deadline was the end of last month, but the SRA secured a six-month extension.

The Financial Conduct Authority (FCA) assumed overall responsibility for regulating consumer credit work in April this year.

After next year’s deadline, the only way the SRA could continue to regulate consumer credit work would be if it adopted much or all of the rules used by the FCA.

Crispin Passmore, SRA executive director for policy, said: “Consumer credit regulation is a complex matter. It is vital that clients receive the proper protections, and the FCA are much better placed to regulate these activities than we are.

“We will continue to engage with both the FCA and HM Treasury to find a way forward that provides a workable regulatory framework that protects the interests of clients. But as things stand, we have to consider the option of pulling back from regulating consumer credit activities.”

The SRA launched a consultation yesterday on the best way forward from 1 April 2015, and its possible withdrawal from regulating consumer credit activities

Firms currently carrying out consumer credit activities would be required either to apply for authorisation from the FCA, or stop providing those services.

A spokesman for the SRA added that the FCA’s rules did not fit with the SRA’s regime. “This would add extra regulatory burdens to firms, while the SRA does not have the resources or the expertise in place to supervise firms in the way the FCA requires.”

The consultation closes on 15 December 2014.

Tags:




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Reports

No larger firm can ignore the demands of innovation – that was the clear message from our most recent roundtable: “The law firm of the future”, sponsored by LexisNexis Enterprise Solutions. It comes in many forms, predominantly but not just technology, and is not simply a case of automating process. Expertise and process are not mutually exclusive.

Blog

16 November 2018

Transparency is about a lot more than just price

The transparency agenda is much more than the figures you put on your website; it all comes back to communication, the root of so many lawyers’ problems if you look at the types of complaint that go to the Legal Ombudsman.

Read More