The regulatory changes set by the FCA earlier this year could cost businesses more than £100m by 2020, according to Compliancy Services.
Research conducted by the company has revealed that 14,500 firms across sectors from used-car dealerships and double-glazing firms to office equipment suppliers will face costs of over £38 million to obtain their authorisation by the Financial Conduct Authority. With further costs of up to £13.8m per year to remain compliant.
Compliancy Services warns that too many firms are way behind in understanding how to be compliant and don’t know how to apply to obtain authorisation and unless firms take steps now to do this, they could be forced to cease all consumer credit related activities.
Chief executive at Compliancy Services Ben Mason said: “We’ve been advising firms that offer consumer finance on the authorisation process ever since the FCA assumed oversight of the sector in April. Yet, far too many firms are still way behind in understanding how to apply for FCA authorisation and what they need to do to be compliant. They simply cannot afford to underestimate the time and resource they need to put into this. It’s not optional either; if they don’t do this in time, there’s a risk that the FCA could take enforcement action against them.
“Furthermore, if they fail to submit their application before their so called ‘landing slot’ closes, their licence will simply lapse and they may no longer offer any regulated consumer credit services.
“There is support available, but consumer finance firms need to make the most of their landing slots and get their compliant policies and procedures in place now. For those who have not yet addressed this, it’s now a race against time.
“Firms face two very separate challenges: first to become FCA authorised, then to maintain on-going compliance, both of which are time-consuming processes. Many firms’ sole focus appears to be on getting authorised by the FCA, but they have failed to realise that they should have implemented compliant policies and procedures from April 1.”
According to Compliancy Services, firms that applied before April for interim permission from the FCA to continue their business as usual are now arriving at the landing slots set by the regulator for them to obtain their authorisation. Each firm has been assigned a landing slot which is a three month application period between October 2014 and March 2016. Any firm failing to apply during their landing slot will automatically cease being able to continue their consumer credit activities.