Most dealers hold a consumer credit licence from the Office of Fair Trading (OFT) covering categories C (credit brokerage), D (debt adjusting) and/or E (debt counselling).

From 1 April 2014, these will be regulated activities under the new Financial Conduct Authority (FCA) regime for consumer credit. The new regulated activity of 'credit broking' will comprise not only introducing customers to finance providers, but recommending regulated agreements and assisting with other preparatory work such as completion of application forms.

If you are a dealer holding a consumer credit licence, you need to check now (if you have not already done so) that your licence details are correct and that you hold the correct categories for the activities you wish to carry on post-April.

You then need to apply to the FCA by 31 March 2014 for interim permission to continue your consumer credit-related activities by way of a simple online process. You need to do this even if you already hold FCA authorisation for insurance-related activities.

Applying for full authorisation

Dealers holding interim permission will be called up to apply for full authorisation within a three-month 'application period' at some point between 1 October 2014 and 1 April 2016.

The application form is not yet available, although this is expected to be very detailed and to require submission of a full business plan, together with details of your products and the systems and controls you have in place to ensure regulatory compliance.

What will being authorised mean for dealers?

You will need to make sure that you comply with the rules set out in the FCA's new consumer credit sourcebook (CONC), which comes into force on 1 April 2014 (although there is a six-month 'grace period' to enable firms to implement measures to ensure compliance).

It is expected that there will need to be a significant culture change within many firms to ensure the interests of customers really are at the heart of their business. This will extend to looking at, for example, staff incentive schemes, which are very much a focal point for the FCA at the current time, to ensure these focus on putting customers first rather than being sales-driven.

It is expected that the FCA will be a far more proactive regulator than the OFT.From 1 April 2014, consumer credit advertising will fall within the FCA's financial promotions regime, which has broader application than the current OFT regime. Existing requirements relating to the inclusion and prominence of representative examples and APRs will continue to apply.