Consumer credit and law firms: from 1 April 2016

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Consumer credit and law firms: from 1 April 2016
  • Who regulates consumer credit?
  • Prohibited consumer credit activities
  • Permitted consumer credit activities
  • Client fee arrangements
  • Exempt agreements
  • Relying on the EPF regime
  • Payment by instalments
  • Ancillary credit activities
  • EPF regime and ancillary consumer credit activities
  • More...

Consumer credit and law firms: from 1 April 2016

This Practice Note explains how the SRA’s consumer credit regime operates for law firms. It takes into account the SRA's Consumer credit toolkit and the SRA Financial Services (Scope) Rules.

Who regulates consumer credit?

Before 1 April 2014:

  1. consumer credit activities (including entering into consumer credit agreements) were regulated by the Office of Fair Trading (OFT)

  2. law firms had the benefit of a group licence for consumer credit work which was issued by the OFT to the SRA and therefore didn't need an individual licence to enter into consumer credit agreements with clients or engage in ancillary consumer credit activities

On 1 April 2014, the Financial Conduct Authority (FCA) took over regulation of consumer credit work and the SRA's group consumer credit licence disappeared, meaning law firms lost the benefit of the group licence for all consumer credit activities.

Since 1 April 2014, consumer credit activities fall within the Exempt Professional Firms (EPF) regime. You can therefore undertake certain consumer credit activities under the EPF regime (ie without being licensed by the FCA), so long as:

  1. you register on the FCA’s EPF register, and

  2. those activities are incidental to your professional services

The SRA Financial Services (Scope) Rules set out the scope of the regulated consumer credit activities that may be undertaken by a firm authorised by the SRA, but

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