FLA publishes supplementary briefing on OFT's Guidance
Richard Humphreys, partner at Blake Lapthorn, has assisted the
FLA in producing the supplemental briefing, published 19 September
2012, on the OFT's Guidance for Credit Brokers and
Intermediaries.
The Guidance was published in November 2011 and sets out the
OFT's expectations for fair business practices on the part of
credit brokers and intermediaries when offering credit to potential
or actual borrowers. The supplemental briefing is non-binding and
is intended to help FLA members who use brokers and intermediaries
to comply with the Guidance. It provides relevant, practical
examples of how the Guidance might be implemented effectively.
Although the Guidance is specifically directed at credit brokers
and intermediaries, financers also have responsibilities to take
"reasonable steps" to satisfy themselves that the credit brokers
and intermediaries they work with are not engaging in unfair
business practices or acting unlawfully and that they are
appropriately licensed. Financers will find it helpful to
familiarise themselves with the Guidance through the Briefing as
they:
- should not trade with credit brokers and intermediaries who are
not following the Guidance; and
- might be asked to assist intermediaries in complying with the
Guidance.
The briefing is set out as follows:
- section 1 – introduction: summarises the
purpose of the Guidance and the Briefing
- section 2 – definitions of credit brokers and
intermediaries: sets out an illustrative list of examples
of "credit brokers", the definition of "credit intermediaries" and
what firms might be classed as both
- section 3 – scope of the OFT Guidance: sets
out the obligations placed on credit brokers and intermediaries in
the Guidance, as well as relevant wider legal duties. This section
also sets out the responsibilities that the Guidance places on
lenders
- section 4 – disclosing status to borrowers:
sets out the information credit brokers and intermediaries may need
to disclose to borrowers in order to satisfy the Guidance and
provides some practical suggestions on how this might be done
- section 5 – disclosing the existence of commission to
borrowers: sets out the expectation in the Guidance that
the existence of commission should be disclosed to the extent that
it could affect independence and give rise to a conflict of
interest. This section includes useful scenarios demonstrating when
the need for disclosure might be triggered and examples of how this
could be done
- section 6 – disclosing the amount of commission to
borrowers: sets out what constitutes a "request" from a
borrower, how the amount of commission should be calculated and how
this should be communicated to the borrower
- section 7 – complaints handling briefly:
summarises the FSA's rules on how complaints must be managed
- section 8 – regulatory compliance: sets out
the OFT's expectation on compliance. It is important to note that
the Guidance expects that licensed businesses should have begun
immediately to work towards full compliance.
Access the briefing
online.
