CONC 16.1 Application and purpose

Module

Disapplication or modification

Threshold Conditions (COND)

The guidance in COND applies with the necessary modifications to reflect Part 4 of the Deferred Payment Credit Order (see Notes 1 and 2).

Note 1

A firm has deferred payment credit temporary permission on and after the deferred payment credit regulatory commencement date to carry on deferred payment credit activity where the conditions set out in Part 4 of the Deferred Payment Credit Order have been met. According to article 11(6) of that Order, the duty imposed by section 55B(3) of the Act (satisfaction of threshold conditions) does not apply where the FCA exercises its powers under: 

(1) section 55J of the Act (Variation or cancellation on initiative of regulator);

(2) section 55H of the Act (Variation by FCA at request of authorised person) to remove a regulated activity; or

(3) section 55L of the Act (Imposition of requirements by FCA), 

in relation to a firm that has deferred payment credit temporary permission in relation to deferred payment credit activity carried on under its deferred payment credit temporary permission. Guidance in COND should be read accordingly.

Note 2

The effect of article 11(9)(a) of the Deferred Payment Credit Order is that the deferred payment credit activity for which a firm has deferred payment credit temporary permission is to be treated as if it were not a regulated activity for the purposes of construing the reference to the only regulated activities that a person carries on, or seeks to carry on, contained in paragraphs 2C(1A), 2D(3A) and 2F(3) of Schedule 6 to the Act. This means that a firm may have limited permission while also having a deferred payment credit temporary permission, and the guidance in COND 1.1A.5AG should be read accordingly.

Statements of Principle and Code of Practice for Approved Persons (APER)

For the purposes of determining the application of APER where a firm's permission includes permission to carry on regulated activities granted by the FCA under Part 4A of the Act (as well as permission arising by virtue of a deferred payment credit temporary permission): 

(1) where the application of a provision is determined in whole or in part by reference to the firm's permission, the firm's deferred payment credit temporary permission is to be disregarded; and 

(2) where the application of a provision is determined in whole or in part by reference to regulated activities carried on by the firm or its appointed representative, any deferred payment credit activity of the firm or its appointed representative which falls within scope of the firm's deferred payment credit temporary permission is to be treated as if it were not a regulated activity.

Note 3

Article 11(2)(d) of the Deferred Payment Credit Order provides that a deferred payment credit temporary permission does not have effect as a Part 4A permission for the purposes of section 59 of the Act.

Note 4

The effect of SYSC TP 13.3R is that a firm with only a deferred payment credit temporary permission is not an SMCR firm. APER will therefore not apply to such a firm. 

General Provisions (GEN) 

(1) For a firm with only a deferred payment credit temporary permission, GEN 4 Annex 1R is modified so that the following disclosure must be included in place of the required disclosure for a UK domestic firm or overseas firm:

‘Deemed authorised and regulated by the Financial Conduct Authority for the purposes of the Temporary Permission regime for Regulated Deferred Payment Credit. Details of the Temporary Permission regime, which allows firms to carry on deferred payment credit activities while seeking full authorisation, are available on the Financial Conduct Authority’s website.’

(2) For a firm whose permission includes permission to carry on regulated activities granted by the FCA under Part 4A of the Act (as well as a deferred payment credit temporary permission), GEN 4 Annex 1R is modified so that the disclosure in (1) must be included in addition to the disclosure in that Annex.

(3) Where a firm to which (1) or (2) applies is in supervised run-off, the firm must use the following status disclosure in place of, or in addition to, as applicable, the status disclosure in GEN 4 Annex 1R: 

‘Deemed authorised and regulated by the Financial Conduct Authority for the purposes of the Supervised run-off regime for Regulated Deferred Payment Credit. Details of the Supervised run-off regime, which allows firms to service deferred payment credit agreements for a limited period, are available on the Financial Conduct Authority’s website.’

(4) The guidance in GEN 4.3.2A is modified accordingly.

Supervision manual (SUP)

SUP 6 (Applications to vary and cancel Part 4A permission and to impose, vary or cancel requirements) applies with the necessary modifications to reflect Part 4 of the Deferred Payment Credit Order (see Note 5).

Note 5

Article 11(4) of the Deferred Payment Credit Order provides that if a firm with deferred payment credit temporary permission applies to the FCA under: 

(1) section 55A of the Act for permission to carry on a regulated activity that is not a deferred payment credit activity; or 

(2) section 55H of the Act to vary a permission that is not a deferred payment credit temporary permission by adding a regulated activity that is not a deferred payment credit activity,

the application may be treated by the FCA as relating also to one or more of the regulated activities for which the firm has deferred payment credit temporary permission.

For the purposes of determining the application of SUP 10A (FCA Approved Persons in Appointed Representatives) where a firm's permission includes permission to carry on regulated activities granted by the FCA under Part 4A of the Act (as well as permission arising by virtue of a deferred payment credit temporary permission):

(1) if the application of a provision is determined in whole or in part by reference to the firm's permission, the firm's deferred payment credit temporary permission is to be disregarded; and 

(2) if the application of a provision is determined in whole or in part by reference to regulated activities carried on by the firm or its appointed representative, any deferred payment credit activity of the firm or its appointed representative which falls within scope of the firm's deferred payment credit temporary permission is to be treated as if it were not a regulated activity. 

Note 6

Article 11(2)(d) of the Deferred Payment Credit Order provides that a deferred payment credit temporary permission does not have effect as a Part 4A permission for the purposes of section 59 of the Act. 

Note 7

The effect of SYSC TP 13.3R is that a firm with only a deferred payment credit temporary permission is not an SMCR firm. SUP 10A will therefore not apply to such a firm. 

SUP 11 (Controllers and close links) does not apply to a firm with only a deferred payment credit temporary permission (see Note 8).

Note 8

A firm that was not an authorised person immediately before the deferred payment credit regulatory commencement date is not to be treated as an authorised person for the purposes of Part XII of the Act (Control Over Authorised Persons) by virtue of holding a deferred payment credit temporary permission (see article 11(7) of the Deferred Payment Credit Order).

The guidance in SUP 12 (Appointed representatives), and any guidance elsewhere in the Handbook, concerning the effect of section 39 of the Act, applies with the modifications necessary to reflect article 11(2)(b) and (3) of the Deferred Payment Credit Order.

Note 9

The effect of articles 11(2)(b) and (3) of the Deferred Payment Credit Order is that if the only activities in a firm's permission are those permitted by virtue of a deferred payment credit temporary permission (or for which the firm has a limited permission), the firm may still be an appointed representative in relation to the carrying on of other regulated activity which is comprised in the business for which the firm's principal has accepted responsibility.

SUP 16 (Reporting requirements) does not apply: 

(1) to a firm with only a deferred payment credit temporary permission; or 

(2) to any other firm, with respect to: 

(a) the firm's deferred payment credit temporary permission; and 

(b) the carrying on of deferred payment credit activity for which it has deferred payment credit temporary permission.

Disputes Resolution: Complaints sourcebook (DISP)

(1) DISP 1.10 (Complaints reporting rules) does not apply to a firm with only a deferred payment credit temporary permission. 

(2) Where a firm's permission includes permission to carry on regulated activities granted by the FCA under Part 4A of the Act (as well as permission arising by virtue of a deferred payment credit temporary permission), complaints about deferred payment credit activity are not to be included by that firm in a report required by DISP 1.10 (Complaints reporting rules).

(3) Where a firm with deferred payment credit temporary permission is granted or given Part 4A permission by the FCA to carry on deferred payment credit activity, or has its Part 4A permission varied to include permission to carry on deferred payment credit activity, the firm must report all complaints concerning deferred payment credit activity received during the period when the firm had deferred payment credit temporary permission, in its first report due under DISP 1.10.

Note 10

The effect of (2) is that the firm is not required to include complaints concerning deferred payment credit activity carried on by virtue of the firm's deferred payment credit temporary permission in a report required by DISP 1.10. But in the circumstances mentioned in (3), the firm must include all such complaints received during the period when the firm had deferred payment credit temporary permission, in its first report due under DISP 1.10.

Where necessary for the purposes of article 11(2)(b) and (3) of the Deferred Payment Credit Order, the definition of ‘appointed representative’ is to be read subject to those provisions.