Its not often that i complain about the UK regulators, but i really am disappointed by the FCA and their authorisation system. In my view its shambolic and open to total abuse, moreover its actually being abused day after day after day and the FCA seem utterly oblivious, and what’s more when these points are raised with the FCA they seem totally disinterested.
So what’s the issue? Well as we will know from Hicks v Walker & Reynolds, under the OFT licensing regime if you traded in regulated activities without a licence you were committing an offence. This was set out in s21 through to 40 Consumer Credit Act.
The regime was simple, worked, and didnt need change. Basically if you were a creditor under Consumer Credit Regulated agreements you simply had to be licensed and if you weren’t then you were in trouble and the Court could refuse to allow enforcement of the agreement.
Where we seem to be now however is a total mess. The FCA have brought consumer credit into their authorisation regime. No problem with that. What i do have a problem with however is that there is now a mechanism where a debt purchaser can purchase a debt, thus becomes the creditor per Jones v Link Financial and has all the statutory duties of the 1974 Act such as compliance with s78(1) yet can appoint an authorised representative authorised by the FCA and then the debt purchaser doesn’t have to be authorised at all.
From this point, we have a problem, the debt purchaser will often receive a section 78 request from the Consumer, will fail to have regard for the FCA handbook and indeed because they arent authorised they argue they dont need to have effect to that, they will then fail to comply with the s78 request while their appointed agent carries on trying to seek payment and when you challenge the representative they simply say we will put the account on hold while we investigate the next thing you hear is the debt purchaser disputes they are the creditor and have complied with the request anyway by sending any old illegible tat, and when you threaten to report them to the FCA they say ahhhh were not regulated by them, and when you ring the FCA they say the same thing. So the agent does no wrong, the debt purchaser breaks all of the FCA rules without fear of recourse.The next thing the consumer gets is a County Court claim form suing them while the creditor remains in breach of their obligations under the CCA, but of course in the debt purchasers view they arent regulated (their agent is) so they are untouchable.
Far fetched? well im afraid not. In fact we have currently a debt purchaser whose FCA Permissions were cancelled, they are seeking to enforce an improperly executed agreement, they are named on the claim form, yet when challenged about undertaking authorised activities, they say ahhh we rely on Fred Bloggs being authorised therefore we dont need to be. NOWHERE is there any mention of Fred Bloggs on the paperwork, they havent even appeared yet this creditor has failed to do everything, failed to comply with s78, failed to give statements of account, failed to serve a default notice, failed to do anything which it is required to do, yet it claims its not authorised, doesnt need to be authorised, and can do what it likes. To be honest i see very little from the FCA that suggests that they are wrong either.
The OFT at least would deal with things like this, just look at HFO Capital as an example. It seems now that consumers rights can be ignored if you appoint someone else who is authorised which in my view is shocking.