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What would it mean if the Solicitors Regulation Authority (SRA) were to withdraw from the Financial Conduct Authority’s (FCA) designated professional body regime for the purposes of consumer credit activities?
Ian Cockerill, compliance director of SIFA, says this would have a major impact—not just in respect of consumer credit—but in relation to other hitherto exempt financial services activities.
Consumer credit activities—the way forward for firms, LNB News 14/10/2014 82
Firms that carry out regulated credit activities may have to be authorised by the Financial Conduct Authority (FCA) under proposals by the Solicitors Regulation Authority (SRA). A consultation by the SRA seeks views on its proposal to withdraw from the FCA’s designated professional body regime for the purposes of consumer credit activities. This would mean SRA-authorised firms carrying on regulated credit activities would need to apply to the FCA for authorisation, rather than being able to rely on the exemption set out in the Financial Services and Markets Act 2000, Pt 20 (FSMA 2000). The consultation will run until 15 December 2014.
Why have SRA-authorised firms historically been able to rely on FSMA 2000, Pt 20 exemption?
One of the issues confronted by the government in advance of the Financial Services Act 1986 (FSA 1986) was the realisation that certain aspects of solicitors’ legal work would fall within the proposed definition of the activities which would require authorisation and regulation by the new financial services regulator. Potentially, this might have necessitated the regulator taking onto its books over 10,000 law firms and large numbers of accountancy and other professional firms in addition to the financial firms which were the main object of the legislation.
The solution which was adopted was to provide exemption from the requirements of FSA 1986 for firms which were prepared to confine their financial services activities to those which were purely incidental to their legal work, and to delegate to professional bodies such as the Law Society the authority to regulate such activities. The great majority
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