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Our ref:  FOI3831

 

 

Dear Mr Wingate

 

We refer to your request under the Freedom of Information Act 2000 (the
Act), for the following information:

 

“Under the Financial Services Act 2012. The FCA has the power for "product
intervention" under 137d if one of two things happen.

 

(a)    the consumer protection objective or the competition objective, or

 

(b)    if the Treasury by order provide for this paragraph to apply, the
integrity objective.

 

We believe that the FCA is relying upon the second of these two sections
to implement what is commonly known as the Payday Loan price cap.

 

We would be grateful if you could reveal a copy of the order from the
treasury that gives the FCA permission to implement this cap and under
what specific terms or conditions (if any) that treasury has asked the FCA
to do so.”

 

Your request has now been considered.

 

In line with our policy and guidance produced by the Ministry of Justice,
your request for information has not been dealt with under the formal FoIA
regime.  This is because your request is asking for an explanation about
our powers rather than a request for information that we hold.  We have
therefore treated your email of 27 December 2014 as "routine
correspondence".  Please see page 6 of the attached link for further
information:

[1]https://www.ico.gov.uk/tools_and_resourc...

In our letter to you dated 2 December 2014 (copy attached), we explained
that the powers that the FCA used to make the Consumer Credit (Cost Cap)
Instrument 2014 are sections 137A of the Financial Services and Markets
Act 2000 (“FSMA”) (general rule-making power), 137C (cost of credit), 137T
(supplementary power) and 139A (guidance).  The power in section 137D that
you referred to in your request is not relevant to these rules.  There is
no requirement for the FCA to be instructed by the Treasury to make rules.

 

In the case of the price cap, the FCA was placed under a duty by
Parliament by amendment to section 137C FSMA to introduce rules concerning
charges in relation to one or more description of regulated credit
agreement that appeared to the FCA to involve the provision of high cost
short term credit with “a view to securing an appropriate degree of
protection for borrowers against excessive charges”.  The FCA had to
introduce those rules to be in force by 2 January 2015 at the latest.

 

Subsection 1B of section 137C FSMA refers to consulting the Treasury
before FCA published the draft rules.  The FCA has satisfied this
requirement and refers to this in paragraph 4.5 of its Consultation Paper
(CP) 14/10.

 

Yours sincerely

 

 

Information Access Team

Financial Conduct Authority

 

 

 

This communication and any attachments contain information which is
confidential and may be subject to legal privilege. It is for intended
recipients only. If you are not the intended recipient you must not copy,
distribute, publish, rely on or otherwise use it without our consent. Some
of our communications may contain confidential information which it could
be a criminal offence for you to disclose or use without authority. If you
have received this email in error please notify [email address]
immediately and delete the email from your computer.

The FCA (or, if this email originates from the PSR, the FCA on behalf of
the PSR/the PSR) reserves the right to monitor all email communications
for compliance with legal, regulatory and professional standards.

This email is not intended to nor should it be taken to create any legal
relations or contractual relationships. This email has originated from the
Financial Conduct Authority (FCA), or the Payment Systems Regulator (PSR).

The Financial Conduct Authority (FCA) is registered as a limited company
in England and Wales No. 1920623. Registered office: 25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom

The Payment Systems Regulator (PSR) is registered as a limited company in
England and Wales No. 8970864. Registered office: 25 The North Colonnade,
Canary Wharf, London E14 5HS, United Kingdom

Switchboard 020 7066 1000

Web Site http://www.fca.org.uk (FCA); http://www.psr.org.uk (PSR)

 

References

Visible links
1. https://www.ico.gov.uk/tools_and_resourc...