As of March 18th, shops offering limited retail options no longer need to be authorised by the FCA – and won’t be liable to the fees and charges associated with being regulated by them.
Businesses exempt from FCA regulation will have to meet the new lending criteria (see below), but it is expected that the move will free up more retailers to offer finance.
ActSmart director Tony Jones explained: "We became aware of a significant change to the consumer credit regulation with effect from 18th March which essentially means that retail finance is now available to all retailers without the need for FCA Authorisation (formerly known as a CCL – Consumer Credit Licence).
"This is a fantastic opportunity for retailers who have ‘dabbled’ with the idea of offering their customers the ability to spread the cost but have been put off by the licencing fee / process in the past."
Retail finance is said to be worth £50million to the cycle industry.
The new legislation states that a credit agreement will be exempt if it meets all of the following lending criteria:
- it is repayable by no more than 12 instalments (i.e. monthly), within no more than 12 months
- it is a borrower-lender-supplier agreement (i.e. it finances the acquisition of specific goods or services)
- it is for a fixed amount
- it involves no charges or interest (i.e. there can be no admin fee) or is secured on land
This means that retailers who offer 0% (interest free) finance up to 12 months no longer have to be authorised and regulated by the FCA, or be liable for the annual fees and charges involved with being regulated.
ActSmart said: "V12 is currently analysing this new information to make sure that we can use this change in regulation for the benefit of those who think it would fit their model. A full review is expected to be completed within the next 4 weeks and all existing V12 retailers will be contacted.
"Businesses that are currently FCA authorised and meet the above criteria should not cancel their authorisation until V12 retail finance have confirmed that they have made the necessary system amendments to incorporate these changes.
"Retailers are recommended that if they operate on an Interim Permission that they proceed with their full authorisation before their ‘landing slot’ expires."
Get the full details over on the ActSmart site or to find out more about their finance package call them on 0845 618 7256.