Financial Conduct Authority (FCA) regulatory costs were higher than 68% of consumer credit companies had initially budgeted for, according to the a poll taken at the Finance & Leasing Association’s (FLA) latest regulatory conference.
A similar percentage (66%) said the FCA had a good understanding of the credit industry they belonged to, but that the FCA still required some more detailed knowledge. Over a quarter (26%) said the FCA did not have a good knowledge of their particular sector.
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Seven in 10 respondents said knowing what information was required was the most challenging aspect when going through the authorisation. The remainder of respondents were split evenly on what the most challenging aspect between getting queries answered by the FCA, and delays in a case officer being appointed.
Despite these challenges, FLA members again showed an increased preparedness for FCA regulation. In October 2014, a majority (68%) said that more work was required from their firm , with just 34% saying they were well prepared. These positions have now more or less switched, with 62% of firms now saying they are well prepared for FCA regulation, compared to 38% who said they needed more work.
Fiona Hoyle, head of Consumer Finance at the FLA, said: "Firms are much better prepared for FCA regulation than they were a year ago. This is a great achievement, considering the break-neck speed at which the regime was implemented.
"But the industry – and in particular the intermediary market – needs more certainty about the information the FCA expects to see in authorisation applications. We have asked the FCA to consider ways of making their requirements clearer, so as to avoid unnecessary delays for firms applying for authorisation."
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By GlobalDataWhile most firms said they considered themselves well prepared for the regulation, over half said uncertainty over the extent of further regulatory change and cost was the biggest challenge for the future of the consumer credit market.
Regulation creating a smaller market, leading to less completion and market innovation was the second most popular answer to the question, at 25%.
This uncertainty was born out by a question on how many consumer credit firms respondents thought there would be left in the market by March 217. 35% thought there would be 20,000 to 30,000, 34% thought between 30,000 to 40,000 and 31% thought there would be between 40,000 to 50,000.
