“When the FCA assumes responsibility for the consumer credit market on April 1^st it will immediately find itself in conflict with the operating standards of many firms within the industry. The relatively relaxed regulatory environment under the OFT has led to a situation where companies haven’t been incentivised to develop the internal processes they will need in the tightly controlled financial services industry.

For many of the affected firms, the problem is simply one of business practices. The short term, small-scale nature of these businesses has been reflected in the company culture meaning more long-term principles – for example, ensuring credit is affordable for the borrower through Know Your Customer (KYC) and Treating Customers Fairly (TCF) – have been pushed to one side. The positive here is that these principles can be restored relatively quickly by building an effective network of processes which record the necessary data and make it available in the form of Management Information (MI). This MI can then easily be reviewed for the purposes of regulatory compliance, but equally as importantly it can be monitored by management for troubleshooting and strategic business improvements. Effective control of these processes can then be used to reinforce cultural change, one of the pillars of the FCA’s TCF.

Regulation doesn’t have to be a burden, when managed properly the changes forced by the new regulation can be leveraged for competitive gain, a fact that will be highlighted by the industry shake-up that the FCA will no doubt trigger.”