The Pawnbroking Sector and FCA Authorisation – Get ready to land.
Opening in Q1 2016, the application landing slot for the Pawnbroking sector is almost upon us. To achieve FCA Authorisation Pawnbroking firms should now be considering how to ready their business for full permission.
As we’ve seen with other sectors offering consumer credit, the application process for full authorisation is not something that can be done at the last minute. Firms who do leave things to the final hour may get a shock at what’s required.
The FCA sourcebooks take time to read and understand, the application process is time consuming and it is likely that to prepare your business to be compliant with FCA regulation and the Consumer Credit Act you will need to make changes to the way you operate.
If you havn’t already prepared you will have to produce documentation to detail your business processes and a Regulatory Business Plan is central to this. The application process requires that you evidence your systems and controls, and how you will monitor compliance. This will need to show approved persons, roles and responsibilities and your organisational structure to indicate how you will ensure adequate supervision across your business.
Probably what is most different about the FCA regime is that it is principles based. Rather than set out a series of prescriptive actions, the FCA requires that firms evidence how they are operating in the spirit of 11 principles of business (PRIN), the most important of which is TCF or Treating Customers Fairly.
To demonstrate TCF the FCA expect firms to achieve 6 customer outcomes.
- Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.
- Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
- Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
- Where consumers receive advice, the advice is suitable and takes account of their circumstances.
- Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.
- Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
Other key areas that you will need to consider are remuneration and rewards, financial promotions and record keeping. All of these are essential to remaining complaint.
Over reliance on incentive pay may drive aggressive sales behaviours. Your staff must be motivated to ensure good customer outcomes and not to sell products that may be unsuitable and result in longer term detriment for the customer.
Offers and promotions must be clear and easily accessible. Information which might be in any way misleading or ambiguous will be considered non-compliant. Thorough record keeping is important as well as it shows the FCA that you are monitoring your business and in control of it. You should maintain detailed logs of all activities including financial promotions, customer complaints and staff training.
We have unparalleled understanding of the regulatory requirements for Pawnbrokers. Our solutions are created specifically around the needs of your business.
To find out how to achieve authorisation and to remain compliant contact us now whilst you still have time.