The Solicitors Regulation Authority (SRA) and Financial Conduct Authority have agreed that transitional arrangements for firms wanting to carry out consumer credit activities will be extended by a further six months, from 30 September 2014 to 1 April 2015.
The group licence, held by the Law Society and managed by the SRA, under which law firms carried out consumer credit activities ended on 1 April this year, when the FCA took over responsibility for this from the Office of Fair Trading.
The activities involved are wide-ranging and include debt collection, limited advice on financial services and, in some cases, allowing clients to pay fees by installments.
The Legal Services Board warned when the FCA took over that there was a “real risk” that law firms did not understand the impact of the change, which could have serious consequences.
Consumer credit activities that were licensable under the Consumer Credit Act 1974 have become, from 1 April, regulated activities under the Financial Services and Markets Act 2000 (FSMA).
Firms must be authorised by the FCA, have been granted interim permission by the FCA, be exempt under part 20 of FSMA or cease to carry on consumer credit activities.
Law firms carrying on regulated activities under part 20 do not have to be authorised by the FCA and are referred to as “exempt professional firms”.
The SRA said changes to the rules on scope and the SRA Handbook had been made to ease the transfer of regulation of consumer credit activities to the FCA. The rule changes have been approved by the FCA and the Legal Services Board.
Crispin Passmore, SRA executive director for policy, said the six-month extension “gives us the opportunity to continue to work with the FCA in relation to the rules that will apply to SRA regulated firms under part 20.”