Question to the HM Treasury:

To ask Her Majesty’s Government whether they plan to review the Financial Conduct Authority authorisation exemption for insolvency practitioners.

The government consulted extensively on its reforms to the consumer credit market prior to the transfer of regulation from the Office of Fair Trading to the Financial Conduct Authority (FCA) in April 2014. The result of that consultation included the exclusion for insolvency practitioners when acting in reasonable contemplation of being appointed as an insolvency practitioner (IP).

It remains the government’s view that when an insolvency practitioner is no longer acting in reasonable contemplation of being appointed as an IP, they must be authorised by the FCA if they wish to continue providing debt advice. There are no immediate plans to review this exclusion. However, the government does maintain an interest in the impact of regulation on the debt advice market.

The FCA is thoroughly assessing every debt management firm’s fitness to trade as part of the authorisation process. The size of the debt advice market will not be known until this process is complete. The government will stay in contact with the FCA throughout the authorisation process to monitor the impact on customer journeys and capacity.

For IPs concerned about the potential burden of FCA authorisation, the FCA has been clear that it takes a proportionate approach to setting fees. This includes imposing tiered fees based on the income a firm generates from its credit activities, ensuring that the smallest firms pay the lowest fees. There also remain other options for smaller firms to consider, including the appointed representative regime.