Darren Fisher, Director in DWF's regulatory consulting practice, comments on the temporary financial relief measures introduced by the Financial Conduct Authority (FCA) in response to those consumer credit customers impacted by the COVID-19 crisis. The measures come into force today and require consumer credit firms to implement the change by 14th April 2020.
"The new rules will be welcome news for many consumers and demonstrates how the FCA is creating a level playing field across the lending market including for those consumers who do not use mainstream credit.
"The current crisis is also bringing immediate liquidity and capital adequacy challenges for consumer lending firms themselves. The fact that the FCA were not satisfied that consumer lending firm "Uncle Buck" met the 'Adequate Resources' Threshold Condition and required them to stop lending led to the firm being placed into Administration on 27th March and is a timely reminder that the regulator will intervene where firms don’t continually meet Threshold Conditions. However, the Finance and Leasing Associated ("FLA") has secured access for independent and non-bank lenders to the Coronavirus Business Interruption Loan Scheme ("CBIL") allowing firms to continue to run their business, support existing customers' request for forbearance and to continue lending to new customers.
"Gaining access to the CBIL is good news for consumer credit firms, helping them continue to lend to new customers and helping many more firms to continue to do business and bridge the immediate challenges, thus contributing to keeping the economy going and maintaining the integrity of financial markets."