Beleagured retailers struggling to survive in the tough economic climate have been hit by a new consumer credit fee that ActSmart director Tony Jones has branded ‘criminal’ and an unnecessary penalty cost upon independent retailers.
Smaller businesses – like independent bicycle retailers – will pay the same fee as larger retailers. With retail finance sales playing a key role in the bike retail business during this climate, the move is particularly ill timed and unfortunate.
All CCL holding businesses should have received a letter (dated 15th July) from the Office of Fair Trading (OFT) and the Financial Conduct Authority (FCA), informing them that the FCA will take over consumer credit regulation from the Office of Fair Trading in April 2104, and is requesting businesses to pay up to £350 for interim permission to cover the period from April 2014 to April 2016.
With over 500 retailers currently offering Ride it away cycle finance to their customers, ActSmart subscribers alone must pay over £100,000 to the FCA – despite the fact that these retailers have paid up to £1,225 for an ‘indefinite’ licence with the promise of no maintenance fees for a minimum of five years.
"The ‘Interim Permission’ fee being charged by the Office of Fair Trading and the Financial Conduct Authority is a needless penalty on small businesses that have already paid up to £1225 for an ‘indefinite’ licence," said ActSmart director Tony Jones.
"It is grossly unfair that businesses are being asked to bear the cost of an enforced transfer of their licence from one government body to another, especially as the administration fee is extortionately disproportionate to the actual costs involved. This demonstrates a complete lack of understanding of the pressures currently being placed upon small businesses."
As part of the changes firms will have to register with the FCA from September 2013 or they will not be able to carry on regulated consumer credit activities from 1 April 2014.
The letter sent to licensees warned that they must register for interim permission if they plan to use their consumer credit licence after April 2014. It said: ‘If you do not, you are likely to be operating illegally’.
According to ACT, cycle sales via its Ride it away finance scheme have climbed by over one third in the last quarter and around 60 per cent recent months, reflecting the growing need for customers to be able to spread the cost of big purchases.
ACT is campaigning against these extra fees and keep members up to date with any response from Government. However, at this point retailers have no option other than to pay the additional charge in order to ensure continued access to retail finance and with the Ride it away scheme proving to be one of the most powerful influencers over bicycle sales in the current market no business should risk losing access.