Firms that provide services which pose a higher risk to consumers will be assessed first, including debt management firms, payday lenders and credit brokers.
The process for authorisation will be more rigorous than the previous Office of Fair Trading licensing regime. The emphasis is on creating a sector that works well for both firms and consumers. The FCA expects all debt management firms to meet required standards, including a fair and transparent fee system; solutions that are sustainable for clients; staff driven by training rather than incentives; and appropriate systems and controls that will protect client money.
Victoria Raffe, director of authorisations at the FCA, said:
“These firms are advising consumers who have often reached rock bottom, so it’s important that firms get it right. Many firms are falling well short of our expectations and they will need to raise their game if they want to continue operating.”
