Michael Coogan, former Council of Mortgage Lenders’ director general and now strategic adviser to Loans Warehouse, has revealed his thoughts on the Financial Conduct Authority (FCA) consultation paper setting out the proposals for authorising consumer credit latest firms from 2014.

Its main focus in the short term has been to tighten the rules on payday lenders.

Coogan said: “Overall, the FCA’s objective is to be ‘straightforward and proportionate’, as it recognizes the key differences between mortgage and consumer credit businesses. However, following earlier consultation, the FCA also recognises that not all firms with Office of Fair Trading licences will apply for, or obtain, full authorisation from the FCA.

“The extent of the market structural change for lenders and brokers is difficult to judge at this stage, but the key objective in the coming 12 months must be to minimize disruption for customers.

“Firms can apply for interim permission and get a discount on FCA fees before the end of November. The new FCA regime comes in from April 2014, after which firms will need to apply for authorisation. In the initial period, to smooth the transition, businesses will need to meet current consumer credit requirements, meet FCA threshold conditions covering governance, compliance and systems and controls, and follow the regulator’s high level principles.

“Put simply, firms will need to meet the test ‘Are the interests of customers and market integrity at the heart of how the firm is run?'”

Coogan added: “Overall, the consultation paper has few surprises. For firms used to a more lax OFT supervisory regime, now is the time to prepare for a step change in approach. Initially, supervision will be light touch, but it will be interesting to see what thematic reviews the FCA plans for the consumer credit sector in 2014. Those plans will be announced in the Spring.”