With the application slot for most-but not all-short term lenders having closed on 28 February 2015, those that have not submitted an application for Full Permission by that date (having been notified of that particular slot) will now no longer be able to trade.

Additionally, where these circumstances apply, short term loan lenders will no longer be entitled to collect out any outstanding debts.

The application is the first hurdle to pass into the new world of short term lending. The FCA wish to assess whether lenders meet its “threshold conditions” which include having “mind and management” in the UK, being accessible for supervision, holding sufficient resources, both financial and otherwise, and in the case of personnel resources, that these are competent, experienced and suitable to run the business. Also required for review is a business plan demonstrating a sustainable business model that is based on achieving good outcomes for customers, a cornerstone of the Treating Customers Fairly principle.

11 Fundamental Principles

Businesses are expected to uphold the 11 fundamental principles for business and approved persons in each business will be expected to demonstrate honesty and integrity, financial soundness and competence & capability. Those who have recently completed the Form A as part of the FCA application will have experienced the detailed questions posed as part of that Form.

Compliance Monitoring forms an important element of meeting the required standards and independent monitoring will be a key element of plans moving forward. Where failings are found, feedback is expected to be used to improve policies and procedures to ensure more robust compliance moving forward. Embedding learning points in training is also a good way to ensure implementation of good practice. As part of Compliance Monitoring, checking that the checks that form part of day to day processes is important, to ensure that control mechanisms are operating as they should.

The FCA are unlikely to carry businesses over the threshold, but the marriage needs to work to enable businesses to be commercially viable whilst meeting the TCF outcomes and protecting consumers to an adequate extent.