The debt sale market in the UK is entering a new phase as sellers and purchasers all come under the regulation of the FCA. Are you ready?
There have been many regulatory changes over the years. However, the wave of change to come under the regulation of the FCA is set to be the biggest so far for our industry.
Historically, before and following a sale, there was limited interaction between seller and purchaser. The contract stated what the purchaser could and couldn’t do and it was left at that. Over time, sellers – banks in particular – have stepped up the level of oversight. It is now common for audits before and after a sale, as creditors, either for regulatory or reputational reasons, maintain some ownership of the customer post-sale.
So what impact will the FCA have on debt sale? The key difference this time is that the change affects all participants in the market. As with the FSA before them, the FCA takes a principle based approach to regulation. A result of this is that firms have some latitude in how they choose to interpret the requirements.
What is clear is that it’s not enough to have processes and systems in place – you need to evidence that they’re working. Sellers and purchasers are going to have to work even more closely both pre and post-sale to ensure that both parties can gather the evidence needed to satisfy the regulator. For the financial services sellers, this is an incremental change on top of what they have been doing historically to satisfy the Lending Code and the FSA. For others, who are now falling under FCA regulation for the first time a bigger step change will be needed.
Consistency in approach will be everything from a purchaser’s perspective – they interact with a large number of creditors so for efficiency, a market standard would make sense. For all of us who wish to see the currently buoyant debt sale market continue to thrive, our call to action to all parties in the market must be that we work together to look at how we can work collectively to create consistent, high quality information around customer journey post-sale.
By Andy Taylor, Product and Proposition Manager, Debt Sale