Followers of FCA regulatory trends know that what appears in a consultation today is likely to become the rule tomorrow – or at least remarkably close. This shows the detailed thought process and analysis the FCA carries out before going public.
The same can be said for information contained in FCA annual reports or outlooks. It is not just risk officers in regulated firms who need to keep the FCA outputs at the forefront of their risk planning. The recently issued perimeter report update is a good example; commentary relates to the unregulated areas of the ‘buy now, pay later’ market and salary advance schemes.
The regulator, which has always focused on positive consumer outcomes, feels that it is necessary to consider whether behaviours in these business areas “could pose harm to those who are financially stretched.” We have, in the past, seen many examples of the demise of companies transferred into FCA regulation from other regulators, who did not adapt their business models before the transfer, leaving it too late to make the transition. That list includes debt management companies and consumer credit firms from the office of Fair Trading (OFT) and claims management companies from the Claims Management Regulator (CMR).
So, firms in the sectors affected need to quickly consider creditworthiness and affordability checks in particular. Whilst they may not be mandatory right now, these areas will undoubtedly become a focus of the FCA perimeter review and firms need to prepare for them. We have a wide experience in Consumer Credit related issues within regulated sectors, particularly in assessing risk. Risk assessments include whether the customer will be able to afford repayments under the agreement (affordability risk) or will actually make them by their due dates (credit risk).
Whether you are within the regulated or unregulated sectors today, if you would like to find out more about how we help with creditworthiness and affordability reviews, or if you would like to hear more about how we can help you gain better insights and manage and mitigate risk, give us a call.