Consumers: Protection

Treasury written question – answered on 9th July 2014.

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Photo of Stella Creasy Stella Creasy Shadow Minister (Business, Innovation and Skills)

To ask the Chancellor of the Exchequer what assessment he has made of the effect on (a) consumers and (b) endorsement of consumer protection law of the hand-over of investigations from the Office of Fair Trading to the Financial Conduct Authority.

Photo of Andrea Leadsom Andrea Leadsom The Economic Secretary to the Treasury

The Government has fundamentally reformed regulation of the consumer credit market. The transfer of regulatory responsibility for consumer credit from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) took effect in April. The FCA has stronger powers and is far better equipped to protect consumers than the OFT.

The Government has ensured that the FCA has inherited the OFT’s powers (both criminal and regulatory) in relation to misconduct which occurred before 1 April 2014, as well as considerably strengthening the FCA’s powers in relation to misconduct which occurs under the new regulatory regime.

The FCA has the same powers as the OFT had to investigate and prosecute offences under the Consumer Credit Act 1974.

The FCA has also inherited the OFT’s power to fine, although the OFT’s power to fine under the Consumer Credit Act was limited to fining a firm for breaches of a requirement imposed by the OFT (and the maximum penalty in this regard was £50,000). The Government has already strengthened the new regime by giving the FCA the ability to impose unlimited fines for breaches of regulatory requirements that take place after 1 April 2014.

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