Tenants may from time to time seek advice from you on debts which they may have outside of any rent arrears. With the pressures of the benefits changes starting to take effect there may be an increase in tenants seeking more, and more detailed, help and advice.
The insurers for the sector recognise this service and extend their liability policies, be it public liability or professional indemnity, to cover the risks, just in case the advice given was not correct and a financial settlement is required.
Until recently organisations providing credit, debt advice or counselling were required to be registered with the Office of Fair Trading (OFT). In 2014 this changed and the authorisation now falls to the Financial Services Authority (FCA).
Housing Associations now need to be regulated by the FCA if they are involved in any activity relating to credit.
Details, as well as the registration form are available from the FCA website www.fca.com.
At the present time interim permissions are in place which allows for the continuation of activities, but the forms have to be completed online and the FCA will then deal with the transfer of all organisations into a new regulatory environment. We expect that the majority of housing associations would already have been contacted and in most cases the transfer from the OFT to the FCA facilitated. However, if you are still relying on the OFT licence and you are not aware that the association has registered for interim permissions and debt advice and counselling is part of your activities you may need to act.
There is also a potential impact on your insurance cover. We have seen different stances taken by different Insurers. Some insurers are initially reluctant to cover a regulated activity. Some have policy wordings which specifically exclude cover for organisations regulated by the FCA, but will amend the cover if required.
There are some associations who do not undertake any debt counselling or advise and outsource the service. However there are a number of activities which could still fall into the definition of regulated activity, for example:
- Alarm loan in sheltered schemes
- Stair lift loans
- White goods or furniture pack sale and repayment plans.
There will be other activities which may touch the regulated activity, so it is important that you understand the implications of the changes in regulation. We suggest that you firstly identify if you currently have an OFT licence. The person who is responsible for the licence renewal should be aware of the changes and will hopefully be able to confirm that you have interim permissions. The FCA website is a useful source of information and on contacting their helpline to initially discuss the issue they were able to assist and provide very helpful guidance.
We expect there will be little or no impact on the insurance arrangements once insurers understand the changes in regulations, It will not change the risk they are covering.