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The Financial Services Act 2012 (Consumer Credit) Order 2013

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2013, ISBN 9780111100516

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Order laid before Parliament under section 116(1) of the Financial Services Act 2012, for approval by resolution of each House of Parliament.

Financial Services And Markets

Made * 2013

Coming into force in accordance with article 1

In accordance with section 116(1) of the Financial Services Act 2012f1, a draft of this Order has been laid before Parliament and approved by a resolution of each House.

In accordance with section 107(5) of the Financial Services Act 2012, the Department of Enterprise, Trade and Investment in Northern Ireland has consented to the provisions of this Order which are made by virtue of section 107(2)(i).

The Treasury make the following Order in exercise of the powers conferred by sections 107 and 115(2) of the Financial Services Act 2012:

Annotations to the whole text

Footnotes

f1

2012 c.21.

Contents

  1. 1Citation, commencement and interpretation
  2. 2Functions of the FCA under the 1974 Act
  3. 3Application of provisions of FSMA in connection with failure to comply with the 1974 Act
  4. 4Statements of policy
  5. 5Statements of policy: procedure
  6. 6Disciplinary measures: criminal proceedings and conviction under the 1974 Act
  7. 7Amendments to the 1974 Act
  8. 8Application of provisions of the 1974 Act in relation to failure to comply with FSMA
  9. 9Functions of local weights and measures authorities and the Department of Enterprise, Trade and Investment in Northern Ireland under FSMA
  10. 10Consequential amendments to other legislation
  11. Signature
  12. Explanatory note

1Citation, commencement and interpretation

(1)

This Order may be cited as the Financial Services Act 2012 (Consumer Credit) Order 2013 and comes into force—

(a)

on the day after the day on which it is made, for the purpose of the FCA—

(i)

preparing and issuing statements of policy or altering or replacing a statement of policy;

(ii)

making determinations under the 1974 Act;

(iii)

preparing and issuing information sheets under the 1974 Act;

(iv)

giving notices, directions or certificates under the 1974 Act;

(v)

imposing requirements under the 1974 Actf1;

(b)

in so far as it is not already in force, on 1st April 2014.

(2)

In this Order, “the 1974 Act” means the Consumer Credit Act 1974f2.

2Functions of the FCA under the 1974 Act

References in FSMAf1 to the FCA’s functions under FSMA are to be treated as including the FCA’s functions under the 1974 Act resulting from this Order.

3Application of provisions of FSMA in connection with failure to comply with the 1974 Act

(1)

The following provisions of FSMA apply in relation to a requirement imposed by or under the provisions of Parts 2, 4, 5 and 6 to 12 of the 1974 Act (“a relevant requirement”) with the modifications specified.

(2)

Section 1L (supervision, monitoring and enforcement)f1 applies as if—

(a)

in subsection (1) the reference to “supervising authorised persons” included a reference to determining whether authorised persons are complying with relevant requirements;

(b)

in subsection (2), the reference to requirements imposed by or under FSMA in a case where the FCA is the appropriate regulator for the purposes of Part 14 of FSMA (disciplinary measures)f2 included a reference to relevant requirements.

(3)

Section 66 (disciplinary powers)f3 applies as if the reference in subsection (2)(b)(i) to a requirement imposed by or under FSMA included a reference to a relevant requirement, and sections 67 (disciplinary measures: procedure and right to refer to Tribunal)f4 and 68 (publication)f5 apply as if the references to section 66 were to that section as applied by this Order.

(4)

Part 9 (hearings and appeals)f6 applies as if in section 133 (proceedings before Tribunal: general provision)f7—

(a)

the references to decisions under sections 66 (disciplinary powers), 205 (public censure)f8, 206 (financial penalties)f9 and 206A (suspending permission to carry on regulated activities etc.)f10 of FSMA were references to decisions under those sections as applied by this Order;

(b)

the references to a reference or appeal to the Tribunal includes a reference to a reference or appeal to the Tribunal under FSMA as applied by this Order.

(5)

Part 11 (information gathering and investigations)f11 (with the exception of section 169 (investigations etc. in support of overseas regulator)f12) applies as if—

(a)

the reference in section 165(4) (regulators’ power to require information: authorised persons etc.) to functions conferred on the FCA by or under FSMA included a reference to functions conferred on it by this Order;

(b)

the reference in section 167(1) (appointment of persons to carry out general investigations) to a good reason included a good reason by virtue of the functions conferred on the FCA by this Order;

(c)

in section 168 (appointment of persons to carry out investigations in particular cases)—

(i)

subsection (1) included a reference to an offence under the 1974 Act;

(ii)

subsection (4) included a reference to circumstances suggesting that a person may have failed to comply with a relevant requirement (excluding circumstances suggesting that an offence under the 1974 Act may have been committed).

(6)

Part 13 (incoming firms: intervention by FCA or PRA)f13 (with the exception of sections 195 (exercise of power in support of overseas regulator), 195A (contravention by relevant EEA firm or EEA UCITS of directive requirements), 198 (power to apply to court for injunction in respect of certain overseas insurance companies) and 199A (management companies: loss of authorisation)) applies as if—

(a)

in section 194(1) (general grounds on which power of intervention is exercisable) each reference to a requirement imposed by or under FSMA included a reference to a relevant requirement;

(b)

in section 199 (additional procedure for EEA firms in certain cases) the reference in subsection (2)(a)(i) to a requirement imposed by the regulator under FSMA included a reference to a relevant requirement.

(7)

Part 14 (disciplinary measures) applies (with the exception of sections 210 (statements of policy)f14 and 211 (statements of policy: procedure)f15) as if in section 204A (meaning of “relevant requirement” and “appropriate regulator”)f16—

(a)

in subsection (2), the definition of “relevant requirement” included a relevant requirement;

(b)

in subsection (6), the reference to any other requirement imposed by or under the Act included a relevant requirement.

(8)

Section 380 (injunctions)f17 applies as if the reference in subsection (6)(a)(i) to a requirement imposed by or under FSMA included a reference to a relevant requirement.

(9)

Section 382 (restitution orders)f18 applies as if the reference in subsection (9)(a)(i) to a requirement imposed by or under FSMA included a reference to a relevant requirement.

(10)

Section 384 (power of FCA or PRA to require restitution)f19 applies as if the reference in subsection (7)(a) to a relevant requirement imposed by or under FSMA included a reference to a relevant requirement; and accordingly sections 385 (warning notices)f20 and 386 (decision notices)f21 apply where there has been a contravention of a requirement under section 384 as applied by this Order.

(11)

Part 26 (notices)f22 applies as if—

(a)

in section 391 (publication)f23, the references in subsection (1ZB) to warning notices given under sections 67 (disciplinary measures: procedure and right to refer to Tribunal) and 207 (proposal to take disciplinary measures)f24 of FSMA were to warning notices given under those sections as applied by this Order;

(b)

in section 392 (application of sections 393 and 394)f25, the references to a warning notice and a decision notice given under any of the provisions specified in that section included a warning notice and a decision notice given under any of those provisions as applied by this Order.

(12)

Part 27 (offences)f26 applies as if—

(a)

references to an offence under FSMA included an offence under that Act as applied by this Order;

(b)

in section 401 (proceedings for offences)f27, in subsection (1), the definition of “offence” included an offence under the 1974 Act.

4Statements of policy

(1)

The FCA must prepare and issue a statement of its policy with respect to—

(a)

the imposition of penalties, suspensions or restrictions imposed under sections 66 (disciplinary powers), 205 (public censure), 206 (financial penalties) and 206A (suspending permission to carry on regulated activities etc.) of FSMA as applied by article 3;

(b)

the amount of penalties imposed under sections 66 and 206 of FSMA as so applied;

(c)

the period for which suspensions or restrictions imposed under sections 66 and 206A of FSMA as so applied are to have effect.

(2)

The FCA’s policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—

(a)

the seriousness of the failure in question in relation to the nature of the requirement concerned;

(b)

the extent to which that failure was deliberate or reckless; and

(c)

whether the person against whom the action is to be taken is an individual.

(3)

The FCA may at any time alter or replace a statement issued by it under this article.

(4)

If a statement issued under this article is altered or replaced by the FCA, the FCA must issue the altered or replacement statement.

(5)

The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this article.

(6)

A statement by the FCA issued under this article must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

(7)

In exercising, or deciding whether to exercise, its powers under section 66, 205, 206 or 206A of FSMA as applied by article 3 in the case of any particular contravention, the FCA must have regard to any statement published by it under this article and in force at the time when the contravention in question occurred.

5Statements of policy: procedure

(1)

Before the FCA issues a statement under article 4, the FCA must publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public.

(2)

The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.

(3)

Before issuing the proposed statement, the FCA must have regard to any representations made in accordance with paragraph (2).

(4)

If the FCA issues the proposed statement it must publish an account, in general terms, of—

(a)

the representations made to it in accordance with paragraph (2); and

(b)

its response to them.

(5)

If the statement differs from the draft published under paragraph (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with paragraph (4)) publish details of the difference.

(6)

This article also applies to a proposal to alter or replace a statement.

6Disciplinary measures: criminal proceedings and conviction under the 1974 Act

A person may not be convicted of an offence under the 1974 Act in respect of an act or omission in a case where the FCA has exercised its powers under section 66, 205, 206 or 206A of FSMA in relation to that person in respect of that act or omission.

7Amendments to the 1974 Act

(1)

The 1974 Act is amended as follows.

(2)

In section 49 (prohibition of canvassing debtor-creditor agreements off trade premises)f1 for “OFT” in each place substitute “FCA”.

(3)

In section 60 (form and content of agreements)f2—

(a)

in subsection (1)—

(i)

for “Secretary of State” in each place substitute “Treasury”;

(ii)

for “him” in the first place it occurs substitute “them”;

(b)

in subsection (3), for “OFT” in each place substitute “FCA”;

(c)

in subsection (4), for “OFT” substitute “FCA”.

(4)

In section 64(4) (duty to give notice of cancellation rights)f3, for “OFT” in each place substitute “FCA”.

(5)

In section 74(3) (exclusion of certain agreements from Part 5)f4, for “OFT” in each place substitute “FCA”.

(6)

In the heading of section 86A (OFT to prepare information sheets on arrears and default)f5, for “OFT” substitute “FCA”.

(7)

In section 86A—

(a)

in subsection (1), for “OFT shall prepare, and give general notice of,” substitute “FCA shall prepare and issue”;

(b)

in subsection (5), for “general notice of it is given” substitute “it is issued”;

(c)

for subsection (6), substitute—

“(6)

If the FCA revises an information sheet after it has been issued, it shall issue the revised information sheet.”;

(d)

in subsection (7), for “general notice of it is given” substitute “it is issued”.

(8)

In section 101 (right to terminate hire agreement)f6—

(a)

in subsection (8)—

(i)

for “OFT” in each place substitute “FCA”;

(ii)

omit “by notice to the applicant”;

(b)

in subsection (8A)—

(i)

for “OFT” substitute “FCA”;

(ii)

omit “by general notice”.

(9)

In section 113(2) (Act not to be evaded by use of security)f7, for “OFT” substitute “FCA”.

(10)

In section 123(6) (restrictions on taking and negotiating instruments), for “Secretary of State” substitute “Treasury”.

(11)

In section 159(8)(a) (correction of wrong information)f8, for “OFT” substitute “FCA”.

(12)

In section 160 (alternative procedure for business consumers)f9, for “OFT” in each place substitute “FCA”.

(13)

In section 161 (enforcement authorities)f10, in subsection (3), for “OFT” substitute “FCA”.

(14)

In the heading of section 166 (notification of convictions and judgments to OFT)f11, for “OFT” substitute “FCA”.

(15)

In section 166(a)—

(a)

for “OFT under” substitute “FCA under the Financial Services and Markets Act 2000 or”;

(b)

for “OFT’s” substitute “FCA’s”.

(16)

In section 170 (no further sanctions for breach of Act)f12—

(a)

in subsection (1), after “except to the extent (if any) expressly provided for by or under this Act” insert “or by or under the Financial Services and Markets Act 2000 by virtue of an order made under section 107 of the Financial Services Act 2012”;

(b)

in subsection (2), for “OFT” substitute “FCA”.

(17)

In section 178 (local Acts), for “Secretary of State” in each place substitute “Treasury”.

(18)

In section 181(1) (power to alter monetary limits etc.)f13, for “Secretary of State” substitute “Treasury”.

(19)

In section 182 (regulations and orders)f14, for “Secretary of State” in each place substitute “Treasury”.

(20)

In section 183 (determinations etc. by the OFT)f15—

(a)

in the heading, for “OFT” substitute “FCA”;

(b)

in subsection (1), for “OFT” substitute “FCA”.

(21)

In section 188(4) (examples of use of new terminology), for “Secretary of State” substitute “Treasury”.

(22)

In section 189 (definitions)f16—

(a)

in subsection (1)—

(i)

after the definition of “exempt agreement” insert—

  • ““FCA” means the Financial Conduct Authority;”;

(ii)

omit the definition of “general notice”;

(iii)

omit the definition of “OFT”;

(iv)

in the definition of “regulations”, for “Secretary of State” substitute “Treasury”;

(b)

in subsection (5), for “OFT” in each place substitute “FCA”.

8Application of provisions of the 1974 Act in relation to failure to comply with FSMA

(1)

The following provisions of the 1974 Act apply in relation to the commission or suspected commission of a relevant offence with the modifications specified.

(2)

Section 162 (powers of entry and inspection)f1 applies as if a reference to “a breach of any provision of or under this Act” included a reference to a relevant offencef2.

(3)

Section 163 (compensation for loss) applies in connection with the powers of a duly appointed officer of an enforcement authority as if the reference to “an offence under this Act” in subsection (1) included a reference to a relevant offence.

(4)

Section 164 (power to make test purchases etc.) applies as if—

(a)

in subsection (1), the reference to “determining whether any provisions made by or under this Act are being complied with” included a reference to determining whether a relevant offence is being committed;

(b)

in subsection (4), the reference to “proceedings under this Act” included a reference to proceedings for a relevant offence.

(5)

Section 165 (obstruction of authorised persons)f3 applies as if—

(a)

in subsection (1)(a), the reference to “acting in pursuance of this Act” included a reference to acting in pursuance of FSMA so far as relating to a relevant offence;

(b)

in subsection (1)(c), the reference to “performing his functions under this Act” included a reference to performing functions under FSMA in relation to a relevant offence.

(6)

Section 174A (powers to require provision of information or documents etc.) applies where a relevant authority (as defined in subsection (5)) is performing functions under FSMA in relation to a relevant offence.

9Functions of local weights and measures authorities and the Department of Enterprise, Trade and Investment in Northern Ireland under FSMA

(1)

Local weights and measures authorities may institute proceedings in England and Wales for a relevant offence.

(2)

The Department of Enterprise, Trade and Investment in Northern Ireland may institute proceedings in Northern Ireland for a relevant offence.

10Consequential amendments to other legislation

(1)

In section 174(2) of the Water Act 1989 (general restrictions on disclosure of information)f1, in paragraph (e), after “the Financial Services and Markets Act 2000” insert “, by or under the Consumer Credit Act 1974”.

(2)

In section 59(3) of the Coal Industry Act 1994 (information to be kept confidential by the Authority)f2, in paragraph (b), after “the Financial Services and Markets Act 2000” insert “, the Consumer Credit Act 1974”.

(3)

In section 105(4) of the Utilities Act 2000f3 (general restrictions on disclosure of information), in paragraph (da)f4, after “the Financial Services and Markets Act 2000” insert “or the Consumer Credit Act 1974”.

(4)

In the Companies Act 2006f5—

(a)

in Part 2 of Schedule 2 (specified descriptions of disclosure), in section (A) (United Kingdom)f6, in paragraph 37, after paragraph (a) insert—

“(aa)

the Consumer Credit Act 1974;”;

(b)

in Part 2 of Schedule 11A (specified descriptions of disclosures for the purposes of section 1224A)f7, in paragraph 52, after paragraph (a) insert—

“(aa)

the Consumer Credit Act 1974;”.

Signature

Name

Name

Two of the Lords Commissioners of Her Majesty’s Treasury

Date

Explanatory note

(This note is not part of the Order)

This Order makes provision in connection with the transfer of responsibility for the regulation of consumer credit from the Office of Fair Trading to the Financial Conduct Authority (the FCA) from 1 April 2014.

Article 2 provides that references in the Financial Services and Markets Act 2000 (FSMA) to the FCA’s functions under FSMA are to be treated as including references to the FCA’s functions under the Consumer Credit Act 1974 (the 1974 Act).

Article 3 applies certain provisions of FSMA to failure to comply with requirements of the 1974 Act. These provisions ensure that the FCA is able to use its FSMA powers to investigate and take appropriate action in relation to contraventions of the 1974 Act.

Article 4 provides for the FCA to issue a statement of policy setting out its policies in relation to the exercise of its powers under sections 66, 205, 206 and 206A of FSMA (covering disciplinary powers, public censure, financial penalties and suspending permission to carry on regulated activities) to contraventions of the 1974 Act.

Article 5 sets out the procedure relevant to FCA statements of policy prepared further to article 4.

Article 6 provides that a person may not be convicted of an offence under the 1974 Act in relation to an act or omission in cases where the FCA has already exercised its powers under section 66, 205, 206 or 206A of FSMA in relation to that act or omission.

Article 7 makes a number of amendments to the 1974 Act to reflect the fact that the FCA will be responsible for regulating consumer credit (rather than the Office of Fair Trading).

Article 8 applies certain provisions of the 1974 Act to contraventions of certain provisions of FSMA. These provisions ensure that where a duly appointed officer of a local weights and measures authority (commonly known as trading standards) or the Department of Enterprise, Trade and Investment in Northern Ireland (both an “enforcement authority” under the 1974 Act) considers that a relevant offence under FSMA (as defined by section 107(4)(b) of the Financial Services Act 2012) may have been committed in relation to consumer credit, that officer may use certain 1974 Act powers to investigate.

Article 9 provides for trading standards bodies to institute proceedings in England and Wales for a relevant offence.

Article 9 also provides for the Department of Enterprise, Trade and Investment in Northern Ireland to institute proceedings in Northern Ireland for such offences.

Article 10 makes consequential amendments to other enactments.

A full impact assessment of the effect that this Order will have on the costs of business and the voluntary sector is available from Her Majesty’s Treasury, 1 Horse Guards Road, London SW1A 2HQ or on www.hm-treasury.gov.uk and is published alongside the Order on www.legislation.gov.uk.