FCA updates on CBILS and BBLS expectations

On 4 May:

• FCA updated its statement about the CBILS and BBLS confirming that its position that lenders who comply with CBILS do not also have to comply with  the creditworthiness rules in CONC 5.2A.4-34 where the lending is regulated continues to apply after the launch of BBLS. It also restated that individuals who comply with the relevant Scheme rules will be considered to have complied with the relevant provisions of COCON. It also confirmed its previously stated understanding that firms need to balance their financial crime risks against the need for a fast and efficient release of funds – but that nothing should prevent firms carrying out appropriate checks if there are any higher risk indicators; and
• FCA wrote to FOS noting that the vast majority of businesses covered by the CBILS and BBLS will be eligible to complain to FOS and asking FOS to give guidance on how it will view lender behaviour, so that lenders can have clarity over what is expected of them. The letter highlights the changes to the RAO that will take BBLS loans that would otherwise be regulated credit agreements outside the lending activity, but stresses that debt collecting in relation to regulated credit agreements that are BBLS loans is still a regulated activity. The letter notes FOS will need to take account of the CONC and CCA requirements that are (or will be) dispplied, as well as those that continue to apply. In relation to CBILS, it notes that from 27 April, the lender must consider whether the business or its group has a viable business proposition without considering concerns over short-medium term business performance. Again, FCA does not (as noted above) expect lenders to comply with the relevant CONC rules that would otherwise apply if they comply with the CBILS requirements. FCA says it understands FOS will take into account that lenders will have a different approach to lending and will give due weight to the need for lenders to comply with the schemes’ requirements. FOS’ response acknowledged the framework and confirmed FCA’s understanding of how it would approach complaints is correct.