SRA Update
Consumer credit group licence
SRA Update Issue 6 – October 2008
The Law Society's consumer credit group licence has been varied to include the two new categories of ancillary credit business which came into force on 1 October 2008. The two new categories covered by the group licence are "debt administration" and "credit information services". The validity date on the current group licence has expired, but the Office of Fair Training (OFT) has confirmed that it remains in force while the OFT considers our application to renew the group licence.
The consumer credit group licence covers all solicitors, registered foreign lawyers, recognised bodies, registered European lawyers and any other person who is the partner of a registered European lawyer to carry on certain categories of credit business.
The categories of credit business covered by the licence are as follows:
| Category |
Category description |
| A |
Consumer Credit (this could include accepting payment of fees by more than four instalments) |
| C |
Credit Brokerage (for example, introducing clients to sources of finance such as a disbursement funding facility) |
| D |
Debt adjusting and Debt Counselling |
| E |
Debt Collecting (where the debts are due under consumer credit agreements and consumer hire agreements) |
| G |
Debt administration (This new category covers taking steps to perform duties under a consumer credit or consumer hire agreement on behalf of the creditor or owner, or to exercise or enforce rights under such an agreement on behalf of the creditor or owner.) |
| H1 |
Provision of credit information services (including credit repair) (This new category covers helping clients to locate and correct records relating to their financial standing held by credit reference agencies and others in credit hire industries.) |
The group licence covers these activities provided that they are carried on in the course of practice as a solicitor. The SRA has applied for the group licence to be renewed on essentially the same basis, but the Office of Fair Training (OFT) has expressed concern about whether firms that undertake debt collection as part of their core business should be covered by the group licence.
The SRA takes the view that the core business of firms that specialise in debt collecting remains the provision of legal advice and services, and that they are therefore covered by the current group licence. However, such firms should be aware that this issue has been raised by the OFT.
We will seek to ensure that, if the terms of the new group licence mean that such firms will need a separate consumer credit licence, there will be sufficient time for firms to apply for and be issued with such licences.
A copy of the group licence and full details of the credit business activities that require a licence can be found at www.oft.gov.uk.