Law firm Addleshaw Goddard has joined the chorus of companies and bodies urging those in the UK car finance industry to make sure they are prepared for the transfer of consumer credit regulation.

Previously, both the Finance & Leasing Association and BMW-owned finance provider Alphera Financial Services have warned their respective members and partners to organise themselves for the change of regulator from the Office of Fair Trading to the Financial Conduct Authority (FCA).

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Addleshaw Goddard reminded lenders, credit brokers and hire companies to apply to the FCA interim permission scheme if they wish to continue trading after 1 April 2014. The law firm estimates as many as 60,000 companies hold consumer credit licences and could face an unlimited fine and suspension of business of up to 12 months if found to be operating without authorisation. Companies were also advised to be aware of, and demonstrate compliance with, both FCA conduct rules and the Authority’s Principles for Business (referred to as PRIN).

Six points for tens of thousands

In particular, Nikki Worden, specialising in consumer finance at the firm, said there was a concern that "companies whose regulated activity is only a minor part of their business may not be aware of the changes that are coming.

"For tens of thousands of companies, this will be a major change with widespread implications. The importance of the transition should not be underestimated."

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The firm is also urging companies involved in consumer credit to follow a six-point checklist:

1. Check your firm’s details with the OFT to confirm if you need to apply for new license categories.
2. Apply for interim permission by March 31, 2014.
3. Ensure that your business is appropriately structured for FCA regulation.
4. Ensure that your firm can demonstrate that it has a tailored conduct risk framework and complies with FCA rules and principles.
5. Update your documentation to include details of your new regulator.
6. Apply for full authorisation.

The Consumer Credit Trade Association held a two-day conference in Nottingham earlier in November to prepare attendees and members for the coming of the FCA. Both Addleshaw Goddard and DWF were represented at the conference, with, respectively, Amanda Hulme offering advice to high-cost short-term lenders and Joanne Davis warning delegates: "If the rules don’t get you, the principles can".

Further coverage of the CCTA conference will be published in the November issue of Motor Finance magazine.

richard.brown@timetric.com