Consumer Credit Firms, FIN074 and the Economic Crime Levy

Posted on: 11 January 2024

Written by: Ben Antcliffe

Make sure it has been applied correctly to your firm to avoid unnecessary payments.

Last year, many Consumer Credit firms were assigned the new FIN074 report on Regdata by the FCA, when it requested annual revenue figures. The report is used to assess whether a firm is liable for the Economic Crime Levy which was introduced by the UK government in early 2023. This is relevant for lending firms, however there are some cases where the new report has been assigned, where it may not be applicable.

What is the levy?

The purpose of this levy is to fund new government action to tackle money laundering and help deliver the reforms committed to in the 2019 Economic Crime Plan. Fundamentally, firms that are captured under the Money Laundering Regulations (MLRs) must register and pay the levy on an annual basis, which is means tested based upon a firm’s total revenue. Only firms with a turnover above £10.2 million will need to pay the levy and for many in the consumer credit sector, this will not be a requirement due to the regulatory permissions they hold.

So why are we talking about this?

In financial services, the MLRs apply to firms which are defined as credit or financial institutions, but in the Consumer Credit sector MLRS do not apply to many firms as they are not captured by their regulatory permissions. On the whole, only firms with lending permissions are captured under the MLRs; however, we are aware that some brokers and consumer hire companies have been included within the request for this information even though they do not meet the appropriate criteria and therefore may be paying fees that they do not need to be.

The amount payable under the Levy is based on overall revenue and not just regulated income. It is also important to note that the Levy is not an FCA fee but is collected by the FCA for regulated firms. Whilst a firm’s other activity might bring them under MLRs, firms need to understand whether or not they are captured. As an example, a credit broker is unlikely to be captured under the MLRs, nor would a Consumer Hire Owner who deals with operating leases only. Conversely, if you are a consumer hire owner and deal with financing leases then you would be captured.

What’s should firms do now?

If your firm has been issued either the FIN074 report or an invoice for payment of the Economic Crime Levy, act quickly to understand whether it is captured by the Levy. Regardless of the outcome of any assessment, firms need to ensure the any reports are submitted on time to avoid fines from the FCA; however, considering the size of the levy, establishing whether the firm is correctly captured by it will pay dividend. Please note that it is incumbent on the firm to evidence to the FCA why they are not captured within the Levy before the FCA will consider removing a firm from the requirement for the payment.

This should also act as a reminder for many firms to review their existing permissions to ensure they do not hold any that are not used and could by the matter of having dormant permissions make the firm liable for the Levy.

How we can help?

We have supported a number of our clients in contesting the fee successfully where the Levy is not payable and can assist firms in establishing whether they are captured under the Levy. If you are unsure about your current position and would like to speak to an expert, contact us and we will happily work through it with you.

Ben A v2

Ben Antcliffe

Ben is the Associate Director leading the Consumer Credit & Insurance team He specialises in the Consumer Credit, Mortgages and General Insurance sectors, providing daily compliance services and support to a wide range of clients.

Contact Ben

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