Understanding Your Limited Permission Consumer Credit Authorisation Application. The Plain English Guide

Transcription

1 Understanding Your Limited Permission Consumer Credit Authorisation Application The Plain English Guide

2 Contents 2 Welcome 6 Why am I reading this Guide? 6 Why is this Guide so long? 6 How long will it take me to submit my application? 6 A brave new world 6 Interim permission 6 Background on the FCA rules and guidance 7 What sort of a consumer credit firm am I? 7 When should I apply? 7 Using FCA systems 7 Use this Plain English Guide to complete the form 7 Hints and tips for using Connect 8 Where can I get more support? 8 Let s get started 9 Section 1 Application Contact Details 11 Section 2 Firm Details 12 Using the Companies House register of firms 12 Firm Details 12 About the Legal Status of the Applicant 12 Interim Permission Details 14 Firm Address Details 15 Website Details 15 Company House Confirmation 15 Firm Contact details 16 Firm Details Confirmation 16 Details of Auditor/Reporting Accountant 16 Details of Professional Adviser 16 Locum Details 17 Other Trading Names 17 Section 3 Permission & Fees 18 Background information 18 Permissions Profiles 18

3 Contents 3 Client Money 18 Appointed Representatives 19 History of Applicant Firm 19 Fees and levies 19 Projected annual income 19 Declaration of ongoing FCA fees liability 19 Section 4: Consumer Credit Supplement 20 Financial Resources 20 Regulatory Business Plan 20 What is a regulatory business plan 20 Why do I need a regulatory business plan? 21 How specific does my regulatory business plan need to be? 21 Do I need to talk about all of my business or just the consumer credit side? 21 How much detail should I include in my regulatory business plan? 21 Scale of Business 22 Business Risks 23 What types of risks should I consider? 23 What is a mitigation plan? 23 Do I need to write a risk mitigation plan? 23 Treating customers fairly 23 What is TCF? 23 What TCF procedures and MI do I need? 24 Systems and Controls 24 Personnel 24 Organisational structure 24 Compliance arrangements 25 Compliance procedures 25 Compliance monitoring programme 26 Financial Crime 26 Section 5: Disclosure Of Significant Events 28 What are the Threshold Conditions? 28 What should I disclose? 29 I have a significant event about my firm to disclose; what will happen next? 29 Disclosure 29

4 Contents 4 Section 6: Owners And Influencers 32 Controllers 32 Close Links 32 Overlap between controllers and close links 32 Close Links Questions 34 Section 7: Related Applications 35 Section 7a: Sole Trader Appendix 36 Individual Details 36 Employment History 36 Fitness and Propriety 36 Supporting Documents 36 Declaration 36 Section 7b: Approved Persons Apply To Perform a Controlled Function 37 What is a controlled function and an approved person? 37 What do Approved Persons need to be aware of? 37 The vetting process 37 How many people do I need to be Approved Persons? 37 Connect application process 37 Individual Details 39 Candidate Details 39 Address Details 39 Directorships 40 Individual arrangements 40 Employment History in the Past 5 Years 41 Fitness and propriety 42 Supporting documents 42 Individual declaration 42

5 Contents 5 Section 7c Controller Application 43 Application process 43 Firm details 44 Section 8: Firm Declaration 49 Review and submission 49 Who must sign the declaration? 49 Signature 49 Paper copy 49 Submission 49 What happens next? 49 How will I know when I am authorised? 49 What if I do not get authorised? 49 What do I have to do next? 49 Appendix 50 Appendix A Treating Customers Fairly ( TCF ) 50 Appendix B Using GABRIEL - What information does the FCA require you to submit and when? 51 Appendix C Compliance Procedures 54 Appendix D Example compliance monitoring programme 56 Appendix E Financial Crime Procedures 58 Appendix F Statements of Principle and Code of Practice for Approved Persons 59 Back Pages 62 Copy right 62 Disclaimers 62 Bovill about us 62

6 Welcome 6 Welcome This Guide has been designed to help you in your journey to FCA authorisation. Bovill are specialists in this area and we have prepared this booklet to help you through the process. NOTE: This Guide will take you through the application process step by step, offering practical tips and clear explanations, so that you can feel confident in completing the online application forms and have prepared the required documents. It will also give you an insight to the way in which you need to run your consumer credit business going forward and what you might expect from the regulator. The move from regulation by the Office of Fair Trading ( OFT ) to the Financial Conduct Authority ( FCA or the regulator ) will have a significant impact on your firm and you should expect to see a change in the way you are regulated. Your first glimpse of this world will be the process you will need to go through to become fully authorised by the FCA. You should be aware though that reading this Guide is not the end of your obligations you will need to take responsibility for your own application and for complying with the rules and regulations going forward. Why am I reading this Guide? As a business you are focused on your customers and delivering a high level of service to them. For example you sell furniture, electrical goods or cars either on your own premises or through a website. In order to provide your customers with different finance options you offer credit and it is this side of your business which we are concentrating on. Your credit offering can take a variety of forms and might include: Interest free credit; Deferred interest free credit; Buy now pay later credit; and/ or Interest bearing credit. All of these options fall within the remit of regulated consumer credit. Your interim permission will soon run out and you will need to apply to the FCA to become authorised in order to continue offering consumer credit and this Guide will help you navigate this process. Why is this Guide so long? Don t be put off by the number of pages! The FCA application process is complex and there are lots of different steps to go through. This Guide will help you through each step. This is not a process which you should expect to complete in your first attempt. The FCA online application system will allow you to complete the sections one step at a time so you can save the information and come back to it at a later date. You should take your time and make sure you are completely happy before you finally submit your application. How long will it take me to submit my application? You should not underestimate the amount of time it will take to collate the required information and prepare the associated documents. The more time and effort you put into preparing your application the easier the process will be and the fewer questions the regulator is likely to raise. A brave new world Responsibility for consumer credit regulation passed from the OFT to the FCA on 1 April You will notice a difference in the way in which you are regulated. Whereas previously you might have only contacted the OFT when you needed to renew your consumer credit licence, under the new regulator you can expect to go through a challenging application process and be subject to much closer scrutiny on an ongoing basis. This is a significant gear change and you need to be prepared for this. Interim permission In this Guide we have assumed that you already have FCA consumer credit interim permission. You should have received a letter confirming this from the FCA and telling you when to apply for authorisation. If you haven t received this letter then you should application.period@fca.org.uk with your OFT licence number (if applicable) in the subject line. If you do not have interim permission you will need to stop any consumer credit activities immediately. Firms which carry on consumer credit activity without appropriate authorisation from the regulator are committing a criminal offence which carries a maximum prison sentence of two years, a fine or both.

7 Welcome 7 Background on the FCA rules and guidance All firms carrying on consumer credit activity must be authorised and must follow certain rules. These rules tell you how you must manage your business and how you must treat your customers. These rules are not optional. The FCA has the power to investigate your firm and if it thinks you are not meeting its standards can use a range of different tools to ensure you comply. These are commonly referred to as enforcement tools. This can include fines, ordering you to pay compensation to a customer or ultimately shutting down your consumer credit business and sending you to prison. It is important therefore that you understand what is required of you The new regulatory world is full of jargon and acronyms some of which will be familiar and some which won t. We have tried where possible not to use jargon and where we do so, we will provide an explanation. The FCA has also produced a jargon buster which provides some helpful guidance. You can download one of these from the FCA website using this link: FCA Jargon Buster 1. What sort of a consumer credit firm am I? There are two different types of consumer credit firm Full Permission firms and Limited Permission firms. This Guide has been prepared for firms which undertake Limited Permission activities in relation to credit broking. For example, you are a furniture retailer who offers interest free credit or you sell goods online and offer buy now pay later credit. If you undertake additional credit activities such as selling credit in customer s homes or you are already authorised to sell insurance then this Guide is not suitable for you. If you are unsure about whether you will be a Limited Permission firm then the FCA have published a Credit Ready - Decision Tool 2 to help you. This can be downloaded from the FCA website. If you are still in doubt after reading this document you should seek professional advice. When should I apply? As mentioned above, you should have already received a letter from the FCA confirming your interim permission number and explaining when you can apply for authorisation. If you cannot find your letter then the FCA have published details of the allotted application periods. This is available on their website via this link: Application Periods 3. Your application period gives you three months in which you can submit your application, for example from 1 January 2015 but before 1 April If you apply within your allocated application period the FCA will make a decision on your application within 6 months if you have submitted all the required information and within 12 months if some of the information is missing. If you do not apply within your allocated time your interim permission will lapse and you must not undertake any consumer credit activity. If you apply before your allocated period the FCA will not process your application and you will need to resubmit when your application period begins. Use this Plain English Guide to complete the application Your Plain English Guide is structured in the same way as the FCA s application system; there is one chapter of the Guide for each section of the application. The FCA application system Your application will need to be submitted using the FCA s Connect system. This is an online system which all consumer credit firms will use to apply for authorisation. Once you have been authorised Connect will also be used for submitting other information to the regulator.

8 Welcome 8 Hints and tips for using Connect Like any online system there are a few points to remember to ensure the application process runs smoothly: Use our Guide to ensure you have all the relevant information to hand before you start; You will need to complete some sections in full before the system will let you move onto the next section; Remember to save each section before exiting or your data will be lost; The system includes some internal validation checks. This means that it will cross check and validate some of the information before it will allow you to move to the next section. For example, if you do not enter a Companies House registration number in the correct format it will come up with an error. Where it has identified an issue, it will give you some further information at the top of the screen and tell you which boxes you need to revisit; There are four main options at the end of each section: - Back this will take you back to the previous screen or the main menu; - Save & Exit this means that the data you have entered will be saved and you will exit that screen; your answer exceeds 4000 characters you will need to attach a separate document. Generally the FCA s Connect system will accept documents up to 25MB in size. If your document is larger than this you should check the Send later box. BUT you still need to send the document immediately after submitting your application ( Send later ) in this context means sending separately from the application process rather than at a later date. Where can I get more support? For more information on consumer credit regulation, your first port of call should be the FCA website. They have published lots of information about how they will regulate consumer credit and how firms can get authorised. We suggest that you read the following documents in addition to this Guide to help you with your application: Being regulated by the FCA: Guide for consumer credit firms 4 FCA Jargon Buster 5 FCA Limited Permission Checklist 6 FCA Limited Permission Application Guidance Notes 7 If, after having read this Guide and the relevant information on the FCA website, there are any areas where you would like further input or help with your CCA application, you should seek professional advice. - Continue this will take you to the next page; - Print this allows you to take a print of that part of the application including the detail you have inputted so far. In some sections you may be required to submit additional information in free format text. These boxes usually have space for 4000 characters so if

9 Let s get started 9 Let s get started Your first step will be to set up your registration on the FCA s Connect system. NOTE: Please note that this Guide follows the format of the CCA application process for companies, so if you are a sole trader you will find that the information set out in this Guide is in a different order to the screens you will see on the Connect system. NOTE: Please note that this Guide is correct at the time of printing however the FCA are continuing to make changes to the Connect system. This Guide may not therefore reflect the application process as you actually experience it however you should find that it covers the large majority of the content. Click on this link to go to the Connect website: Connect Login 8 Once you are on the website, click the link to Register as a New User. This will take you to the New User Registration Page where you can enter your details. When your details are completed, hit the blue Submit button. You will then get a Registration Confirmation page and an will be sent to you with a link to set your password. You will then receive a New Authorisation User Activation from the FCA. Click on the activation link that is embedded in the . This will take you to a screen which includes your user name (the address you registered with) and will ask you to reset your password. Your password must have a mix of letters, numbers and at least one of these special characters:!#$%-_=+<>. Enter your new password and hit the red Save button. Add an authorisation application Once you log-in to the Connect site you will see your User Name plus any consumer credit authorisation applications you have started or submitted. At this stage, no applications will be listed because you haven t started one yet. To start a new application, click on the blue Start New Application button. This will take you to a page with only one option on it: Apply to authorise a new firm, click on this hyperlink. You will then be asked to answer four questions: FCA Question What products does the Applicant intend to sell? There is only one option here, Consumer Credit, and the box is pre-ticked. So you don t need to do anything for this question. FCA Question What type of authorisation is the Applicant applying for? Select Limited. FCA Question traded? Has the Applicant previously If your firm has traded at all to date (including if it is currently trading) the answer to this question should be 'Yes". Otherwise, select No. FCA Question trader? Are you, or will you be, a sole If you meet the description of a sole trader, then select Yes. Otherwise select No. Once you have answered the four questions, you should click the blue Next button and you will see a summary of the different sections you will need to complete. Familiarise yourself with the application sections There are seven sections in the application: Application Contact Details Firm Details Permission & Fees (Consumer Credit Limited) Consumer Credit Limited Supplement Disclosure of Significant Events Owners and Influencers Firm Declaration Next to each section is the Form Status. At this stage, all of the sections will be listed as Not Started. But as you start to complete each section the status will update to either In Progress or Complete.

10 Let s get started 10 To start completing a section, you simply click on the link of the section you want to work on. You will notice that not all the links are available straight away, but once you complete the first two sections ( Application Contact Details and Firm Details ) the links to these sections will become available. This Guide will now take you through each section. 8.

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