The regulatory changes set by the Financial Conduct Authority last year could cost businesses more than £100 million by 2020, according to Compliancy Services.
Research conducted by the company said 14,500 firms across sectors including from used car sales to office equipment suppliers will face costs of more than £38m to obtain their authorisation by the FCA. Remaining compliant may cost up to £13.8m a year.
Compliancy Services warned that too many companies do not understand how to be compliant and don’t know how to apply to obtain authorisation. Unless they take steps now to do this, they could be forced to cease all consumer credit-related activities.
Companies 'cannot afford to underestimate time needed to comply with FCA'
Chief executive at Compliancy Services Ben Mason said: “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.
“If they don’t do this in time, there’s a risk the FCA could take enforcement action against them.
“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.”
Any firm failing to apply during their landing slot will automatically cease being able to continue their consumer credit activities.