What do the 1 April 2016 consumer credit changes mean?
What do the 1 April 2016 consumer credit changes mean?

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

  • What do the 1 April 2016 consumer credit changes mean?
  • What's permitted?
  • What's not permitted?
  • Debt recovery work
  • Other ancillary consumer credit activities
  • Instalment payment of outstanding bill
  • Other types of funding arrangement
  • Information and transparency

On 1 April 2016, the SRA amended the Financial Services (Scope) Rules 2011 to:

  1. explicitly restrict the type of activities firms can engage in under the Exempt Professional Firms (EPF) regime, without requiring a license from the Financial Conduct Authority (FCA)

  2. impose new transparency requirements for firms engaging in consumer credit activities

The amended Rules are supported by an extensive online consumer credit toolkit. This provides additional guidance on credit-related regulated activities, Q&As and case studies.

The SRA has provided guidance on consumer credit since at least 2014 and you have been able to conduct certain consumer credit activities under the EPF regime since 1 April 2014. The question therefore is, do the new rules and toolkit change anything?

What's permitted?

You can conduct consumer credit activities under the SRA's regulatory regime (the EPF regime) where the following tests are met:

  1. the activity arises out of, or is complementary to, the provision of a particular professional service to a particular client, and

  2. the services are provided in a manner which is incidental to the professional services the firm provides, ie not a major part of the practice of the firm

These are not alternative tests. In order to conduct ancillary consumer credit activities under the EPF regime, you must satisfy both tests. You must also account to the client  for any pecuniary reward