Insolvency practitioners have been excluded from Financial Conduct Authority regulation in “specific circumstances”.
The FCA took over regulation of consumer credit from the Office of Fair Trading (OFT) on 1 April, resulting in a number of amendments to “credit activities carried out by insolvency practitioners”.
One change that came into force yesterday is an end to Group Consumer Credit Licences (such as that held by the Insolvency Practitioners Association) and the start of a new regime of Consumer Credit Authorisation.
A statement from the Insolvency Service detailed the circumstances in which an IP will be excluded from FCA regulation: “1. Where an individual is ‘acting as an insolvency practitioner’ for the purposes of Section 388 of the Insolvency Act 1986, the exclusion covers the non-credit activities for which insolvency practitioners were previously exempt, in addition to when providing debt counselling, debt adjusting, debt administration, debt collecting and credit information services;
“2. Where an individual is ‘acting in reasonable contemplation’ of an appointment as an insolvency practitioner. Under such circumstances the exclusion only covers the carrying on of debt counselling, debt adjusting and credit information services.
“By way of example, if in the course of providing initial advice an insolvency practitioner advises why it is considered a Debt Arrangement Scheme or debt management plan may not be the most appropriate option then this would not necessarily be outside of the Government’s exclusion if this advice is given in reasonable contemplation of an appointment as an insolvency practitioner.”
IPs will remain obliged to provide debtors with “balanced” information about their options to reach informed decisions regarding debt management, under the Ethics Code and Statement of Insolvency Practice 3.