Thousands of retailers set to benefit from change in UK law
On 18 March 2015, new legislation was passed by the UK Government that is set to release thousands of small businesses from the requirement to be authorized and regulated by the Financial Conduct Authority (FCA).
Ever since the FCA published its plans in 2013 for the introduction of a new regulatory regime (designed primarily to crack down on the likes of Wonga and other pay day lenders pushing credit terms at rates of 1,000% APR and more), Creative United has been campaigning hard for an exemption to be made for those firms that are involved in offering loans at 0% APR, including members of our Own Art and Take it away schemes.
The change that passed into law last week means that firms who only offer interest free credit agreements that meet the following criteria will no longer have to be authorized and regulated by the FCA, or be liable for the annual fees and charges involved with being regulated:
· The credit agreement is repayable in no more than 12 instalments within a maximum 12 month period
· it finances the acquisition of specific goods or services
· it is for a fixed amount
· it involves no interest or charges (e.g. there can be no admin fee)
Although those firms that offer interest free credit repayable over period of more than 12 months will still be required to be authorized and regulated by the FCA, for many thousands of small businesses across the UK this announcement comes as extremely welcome news.
Mary-Alice Stack, Chief Executive of Creative United said:
“We are extremely pleased and relieved that this exemption has been made, releasing the majority of our members from onerous and daunting requirements of FCA regulation.
It’s also great news consumers and means that the option to purchase goods on interest free credit from smaller and specialist high street retailers will now be more widely available.”
Further details on how the changes are to be implemented by the FCA, including dealing with cancellations and refunds for firms that have applied for authorisation but will now be exempt, are still being released.