The Financial Services Bill – which will set up the new regulatory architecture for financial services and includes powers to allow the new Financial Conduct Authority (FCA) to regulate credit – is now being considered by the House of Lords. Peers have insisted on spending more time on the detail than did the House of Commons, and the Lords have now gone into the Summer recess having only managed to deal with five clauses out of more than a hundred. The FLA have briefed Peers on their main concerns about the proposed new arrangements for the regulation of consumer and small business credit, and several of the FLA arguments have been raised in debate.
The Government has already accepted that the new regime will not be fully up and running until 2016. It is proposing a transition period starting in April 2014, when current holders of Consumer Credit Act (CCA) licences would simply be asked to ‘register’ with the FCA, without any substantial new regulatory hurdles. The Government has also accepted that some parts of the CCA will need to stay in existence after April 2014, with the new FCA taking the current role of the OFT. But the Government still proposes to try to rewrite most of the current CCA (and the associated Guidance) in a new Financial Services and Markets Act rulebook before April 2014. The Government says that it intends this rulebook to reproduce as closely as possible the current regime, so that companies face as little change as possible in 2014. The FLA are arguing that this timetable is unrealistic, and runs a serious risk of unintended consequences. The FLA’s suggestion is that the Government should go slower on the new rulebook so as to minimise market risks in April 2014. The Bill would allow them to do this.