Aug 31 2004
The OFT has launched a consultation on proposed changes to the consumer credit group licensing regime following its review of the way in which the group licensing provisions operate.

The Consumer Credit Act makes provision for the licensing of consumer credit and consumer hire businesses by the OFT. There are two kinds of licence: a standard licence, issued to a particular trader and covering only that trader's business; and a group licence covering 'such persons and activities as are described in the licence'. Individual members of bodies that hold a group licence do not have to apply separately for an individual credit licence unless they wish to seek cover for credit activity which is outside the scope of the particular licence. A wide range of advice bodies and professional associations are holders of group licences.

The review identified a need to strengthen certain aspects of the regime in order to ensure the necessary level of consumer protection and its proper administration.

The OFT proposes a number of changes to address these issues, as follows:
* measures to ensure that group licence holders take prime responsibility for action on fitness issues, taking into account OFT guidance
* revised annual reporting arrangements to the OFT on the regulatory activity of the group licence holder
* a tighter policy on the circumstances in which a group licence will be issued
* widening the exemption from fees to ensure that the OFT maintains its policy of not charging an organisation that provides services free of any charge, fee or commission.

John Vickers, OFT Chairman, said:
'The group licensing regime needs updating to reflect the principles underpinning the current modernisation of the consumer credit framework. Our proposed changes will ensure that group licensing provides consumers with appropriate protection, in line with that established under the standard credit licensing regime.'

The consultation will last for twelve weeks. The closing date for comments is 26 November 2004.

The consultation document Consumer Credit Act 1974: review of the group licensing regime has been sent to the organisations that currently hold a group licence. Other stakeholders who are not included on the list of the document may send their comments to: Rebecca Cook, Credit Projects and Enforcement, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX, email grouplicensing@oft.gsi.gov.uk. Additional copies of the document can be downloaded from the OFT website at www.oft.gov.uk