#LEND360 ● LEND360.org

DEVELOPMENTS IN THE UK

#LEND360 ● LEND360.org

John Gordon, FactorTrust

Jeannette Burgess, Walker Morris, LLP

Marcus Vernon, Realex Payments

UK Regulatory Overview

• Financial Conduct Authority took responsibility (from Office of Fair Trading) for Consumer Credit from 1st April 2014. – They have stronger powers and more resources available

• Lenders must adhere to the FCA’s rules relating to conduct of business. Published in Feb 14, they cover general business management, systems and controls, treating customers fairly, specifically – Affordability assessments, limits on rollovers, limits on use of Continuous

Payment Authority (CPA) to take payment and risk warnings displayed prominently by lenders

– FCA is also looking back at previous lender activities / processes

UK Regulatory Overview

• Consultation Paper 14/10– Statutory duty to impose a price cap (proposed £24 per £100 over 30 days, never

pay back more than double the principal).– Data Sharing - Expect lenders to be reporting in ‘real-time’ to 2 CRAs by Nov 14,

already gathered information on lender activity from CRAs.

• UK Competition Commission (now Competition and Markets Authority) asked to look into the market and lenders. Increased scope to include lead generators. – They state that there is an adverse effect on competition and proposed remedies

including price comparison sites, increased transparency on costs & charges and the role of lead gens.

• Application authorization periods starts Dec. 1, 2014

Panel Questions

Q: Do you expect any additional regulatory changes by the FCA from their consultation period, or is it expected to be what they initially communicated?

Panel Questions

Q: What are the some of the important dates and activities that lenders need to be aware of going forward?

Panel Questions

Q: What has the impact so far from the FCA guidance to the HCSTC (high cost short term credit) industry in the UK?

Panel Questions

Q: Do you see new lending products being developed or will existing one month (payday) products survive?

Panel Questions

Q: What’s the real-time credit reporting guidance for HCSTC lenders the FCA announced from their recent consultation communication?

Panel Questions

Q: What are HCSTC lenders doing to address real-time credit reporting and when does this need to be done?

Panel Questions

Q: Do you think real-time reporting will become compulsory for HCSTC and potentially other lending areas?

Panel Questions

Q: Once these regulatory changes take effect on January 2, 2015, do you think regulatory noise in the HCSTC industry will quiet down a bit?

Panel Questions

Q: How have all the regulatory changes impacted the profitability of existing UK lenders?

Panel Questions

Q: How does the panel anticipate the investigation by the CMA will affect lead generation?

Panel Questions

Q: What is the wider impact of the recent announcement that Wonga will be writing off £220m of customer’s loans as it was not considered that their affordability assessments had been sufficient?

Panel Questions

Q: In your opinion, what will the future HCSTC market look like in the UK? What will be the impact on consumers?

Panel Questions

Q: What are the advantages / disadvantages for new HCSTC lending entrants into the UK market?