FCA reveals what your consumer credit rebate will be worth
Posted on in Business News , Cycles News
If you paid for a Consumer Credit Licence which was issued or renewed on or after 1 April 2009 you may be entitled to rebate.
The Financial Conduct Authority has announced that they will send a cheque prior to April 2014 to all businesses who are entitled to a rebate on their consumer credit licence, following on from the government's announcement in August.
In September last year, ACT reported that the FCA had initiated a programme of rebates to consumer credit licence holders to ensure holders are not being ‘double-charged', following the FCA's takeover of consumer credit from the Office of Fair Trading in April 2014.
ACT were concerned that many of our members had purchased ‘indefinite' licences from the OFT that would no longer be valid after April 2014. In their place, companies were asked to purchase an interim licence that will be valid until October 2014.
The FCA has proposed that firms applying for ‘limited' permissions to undertake lower risk consumer credit business will pay an application fee of £100 if their consumer credit income is less that £50,000 per year. Firms with an income of more than £50,000 face a £500 charge.
Firms that carry out higher risk business will require full consumer credit permission and those fees could range from £1,000 to £15,000 depending how complex the FCA anticipates processing their authorisation will be.
The FCA said to qualify for a rebate, licence holders must have paid for a licence or renewal of a licence, or paid a maintenance fee, after 31 March 2009. This means a firm must have paid an OFT licence or maintenance charge after 1 April 2009.
It added there will be no refunds of the Financial Ombudsman Service levy which forms part of the licence fee, as Fos "continues as an active organisation". Where firms move into full FCA authorisation, the regulator said it will "take into account previous Fos payments when calculating future... levies".
The rebate will be calculated by taking the amount paid to OFT minus any Fos levy and multiplying this by the number of months remaining on the licence, or the number of months to the next maintenance charge. This figure is then divided by 60 - the number of months in the five-year period covered by the rebate.
As an example the FCA cited a hypothetical firm which had paid £1,225 for an indefinite licence with a maintenance charge due in September 2016. Of the fee paid £140 is the Fos levy, leaving a remaining £1,085.
This is multiplied by 29 (the number of months until the maintenance charge is due) and then divided by 60 to give a rebate figure of £524.41.
Prior to April 2014 the FCA said it will send a cheque automatically where its records show a firm holds a licence or, if the FCA requires it to apply, the company will need to hold a licence on the date the application is made.
A firm may also qualify if it held a licence on 23 April 2012 and give Office of Fair Trading statutory notice to surrender before 1 April 2014.
Keep an eye on the news page to stay up to date with any other changes.