The Financial Conduct Authority will send a cheque prior to April 2014 to all those who are entitled to a rebate on their consumer credit licence, following on from the government’s announcement in August.
At the end of August, the FCA confirmed the government has initiated a programme of rebates to consumer credit licence holders to ensure holders are not being ‘double-charged’, following the FCA’s takeover of consumer credit from the Office of Fair Trading in April 2014.
Many firms had purchased ‘indefinite’ licences from the OFT that will no longer be valid after April 2014, while others hold standard or group licences with a later expiry date that will also no longer be valid.
Pressure had been mounting on the regulators after the FCA issued bills for interim licences that will be valid until October 2014. Sole traders were to have to pay £150, with “most other firms” paying £350.
From October 2014 full licences lasting two years will be issued, with costs ranging from £1,000 to £15,000 depending on a company’s income. Licences from the OFT were issued at a cost of £530 for sole traders and £1,326 for other firms.
The FCA said to qualify for a rebate, licence holders must have paid for a licence or renewal of a licence, or paid a maintenance fee, after 31 March 2009. This means a firm must have paid an OFT licence or maintenance charge after 1 April 2009.
It added there will be no refunds of the Financial Ombudsman Service levy which forms part of the licence fee, as Fos “continues as an active organisation”. Where firms move into full FCA authorisation, the regulator said it will “take into account previous Fos payments when calculating future... levies”.
The rebate will be calculated by taking the amount paid to OFT minus any Fos levy and multiplying this by the number of months remaining on the licence, or the number of months to the next maintenance charge. This figure is then divided by 60 - the number of months in the five-year period covered by the rebate.
As an example the FCA cited a hypothetical firm which had paid £1,225 for an indefinite licence with a maintenance charge due in September 2016. Of the fee paid £140 is the Fos levy, leaving a remaining £1,085.
This is multiplied by 29 (the number of months until the maintenance charge is due) and then divided by 60 to give a rebate figure of £524.41.
Prior to April 2014 the FCA said it will send a cheque automatically where its records show a firm holds a licence or, if the FCA requires it to apply, the company will need to hold a licence on the date the application is made.
A firm may also qualify if it held a licence on 23 April 2012 and give Office of Fair Trading statutory notice to surrender before 1 April 2014.