Following its recent roadshows, the FCA has now reinforced their opinion on inferred interest. Their Head of Credit Authorisations, David Fisher, and Martin Goulden, Consumer Credit Policy, answered several questions specifically put to them regarding golf clubs who operate in-house direct debits for subscription.
The good news is that they clarified that clubs may offer a direct debit facility to members, without requiring FCA Authorisation, provided the agreement runs for no longer than 12 months (click here for the full exemption). However, it was emphasised that no charge of any kind can be made against the member for this service. It was recognised that operating a direct debit scheme was a cost to the club but Martin Goulden was adamant that none of this cost could be recouped from the member. He said that the FCA had no powers to alter this as the principle was written into the Legislation and would require Government intervention to affect any changes.
Martin Goulden did say privately that some clubs, dependent on their constitution, may not require FCA Authorisation to charge members for the direct debit facility. If the club and the membership were the same entity then it would not be deemed to be providing credit as the club would be lending to itself. When asked to elaborate on this Martin Goulden would not comment further and stated that legal advice should be sought before a club employs this option.
Those clubs who have already decided to apply for Limited or Full Authorisation should not find the process daunting, said David Fisher. Broadly speaking if you were previously authorised under the Office of Fair Trading, and currently have Interim Permission then you will already fulfil the requirements of FCA Authorisation. He insisted, however, that if you do have Interim Permission and decide not to apply for Authorisation then the FCA will want to know the reasons and golf clubs that just disappear will be actively pursued.
David Fisher also emphasised that anyone who does not apply before the end of their Application Period, and carries on operating a credit facility, will be trading without permission which is illegal and subject to heavy fines. If you have neither Authorisation nor Interim Permission then you will have to apply for and receive Limited or Full Authorisation before you can enter into a credit agreement that does not comply with the exemption.
Following that warning David Fisher stated that the whole process was still in consultation and that comments and feedback can still be left, by Wednesday 6th May 2015, by following this link or by emailing [email protected].