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.