PN 15/02    22 March 2002   

A review of the group licensing regime for consumer credit licences was announced today by the Office of Fair Trading.

Under the system, professional and other bodies can apply for a group licence to cover members or representatives for specific credit activities. Group licences may be granted where the Director General is persuaded that the public interest is better served than by requiring those concerned to apply for individual licences. Once granted, those covered by a group licence do not need to apply individually for a standard consumer credit licence.

The Office of Fair Trading review will consider whether the group licensing regime:

• provides the public with the necessary level of protection,  comparable with that established under the standard licensing regime
• provides licensees with a transparent licensing service, with a fair and consistent approach to the administration and regulation of group licences
• has clear policies and procedures for the efficient administration of the system, for its effective monitoring and for remedial and regulatory action where licensees fail to meet the standards required of them.

Announcing the review, John Vickers, Director General of Fair Trading said:  'Group licences are an important element of the consumer credit licensing regime. This review will look at how group licences are working in practice. It will consider whether effective safeguards for consumers are in place, whether licensees are receiving an efficient service and whether the licensing system is sufficiently transparent.'

The review will also help inform the DTI's overall review of the Consumer Credit Act 1974 which is currently underway. The DTI plan is to publish a consultation paper on the licensing regime in Autumn 2002.

While any organisation can apply for a group licence, the bodies who currently hold one fall into two broad categories (see Note 2):

• advisory organisations whose licences are generally limited to debt adjusting and debt counselling
• professional bodies whose members engage in credit activities across a range of areas, as part of their professional function.

The OFT welcomes comments on all aspects of how these group licences are currently working in practice. In particular, we want to hear views on whether there is adequate guidance on the operation of the system and whether sufficient standards of consumer protection are maintained by the licensees.

Comments should be sent to Susan Edwards, Head of Group Licensing and Special Projects, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX.

NOTES

1. Under Part III of the Consumer Credit Act 1974, a licence is required to carry on the following credit activities:

Category A - consumer credit  
Category B - consumer hire  
Category C - credit brokerage
Category D - debt adjusting and debt counselling
Category E - debt collecting
Category F - credit reference agency

2. Currently there are 13 group licences in effect in relation to the following bodies (with licensed credit categories in brackets):

Law Society of England and Wales (A, C, D, E)
Law Society of Scotland (A, C, D, E)
Law Society of Northern Ireland (A, C, D, E)
Institute of Chartered Accountants in England & Wales (A, C, D)
Institute of Chartered Accountants of Scotland (A, C, D)
Institute of Chartered Accountants in Ireland (A, C, D)
Association of Chartered Certified Accountants (A, C, D)
National Association of Citizens Advice Bureaux (D)
Scottish Association of Citizens Advice Bureaux (D)
Federation of Independent Advice Centres (D)
Approved Local Enterprise Agencies (C, D)
Higher Education Institutions (C)
Liquidators and Receivers (A, B, C, D, E, F)

3. On 18 February 2002 the Department of Trade and Industry published a summary of responses to its consultation on modernising the Consumer Credit Act 1974 entitled 'Tackling Loan Sharks - and More!'. Visit www.dti.gov.uk for further information.