Frontline Solutions to be
regulated under categories C and H of Consumer Credit
Act.
Go deeper with GlobalData
Software providers for the motor finance
sector might be regulated by the Consumer Credit Act (CCA),
Motor Finance has learned.
Evidence of this emerged last month when it was
reported the Office of Fair Trading (OFT) had recently issued
software company Frontline Solutions UK with a consumer credit
licence (CCL).
Frontline managing director Andy Shuter told
Motor Finance that it was issued with the licence as its
activities fall within CCA categories C and H.
Category H encompasses providers of credit
information.
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By GlobalData“If you are involved in passing financial
information between parties, it seems reasonable to suspect that
you might need a CCL,” Shuter said.
He added if brokers were to be considered
Frontline’s customers, then it is being paid to pass financial
proposals to funders, thus also putting it within the possible
remit of Category C.
When Frontline put these suppositions to the OFT,
it had some difficulty in providing a clear answer as to what
licences Frontline required. As a result, Frontline solicitor Mark
Hollinshead queried the OFT in a letter including the following
reasoning:
“Although it could be argued that a category C
licence is required by our clients we are mindful that the
requirement may depend on the definition of ‘customer’ within
category C,” Hollinshead said. “If the customer is the person
ultimately receiving the credit then our clients do not undertake a
direct introduction.
“If the customer could be defined as the person who
deals directly with the public to effect the introduction to the
finance company then our clients would, in our view, require a
category C licence. Our clients have also indicated they may look
to deal directly with the public through the internet and overall
we feel it would be in our clients’ interests to have a category C
licence in respect of this activity.”
Before a clarifying reply could arrive, Frontline
received its CCA certification in the post, covering both
categories C and H.
Although the Office of Fair Trading did not provide
clear guidance in response to questions by Frontline on whether a
CCL was necessary for a company in its position, the fact that a
licence was immediately granted “may deem it to be necessary” for
software companies to become licensed, said Shuter.
Yet in its dealings with over 40 funders, 400
dealers and 25 brokers, Frontline has never once been asked to
provide CCL information.
With the OFT apparently taking the view that
the company should be licensed as a credit broker and information
provider, funders may want to consider whether other software
providers should be doing the same.
