INDEPENDENT SCHOOLS NEED TO ENSURE THEY DON’T FALL FOUL OF CHANGE FROM OFT TO FCA REGULATION WHEN OFFERING OPTIONS FOR FEES PAYMENTS
Epsom, April 2014 – As the cost of sending children to private and independent schools has risen, many parents have found that paying fees in instalments, rather than paying a lump sum at the beginning of term, makes the cost more manageable and fits into the usual way they pay monthly bills. Being able to offer fees payment by instalments has therefore become a popular choice for schools. But school fees funding specialist, SFP, is urging school bursars to review any current financing options offered to parents to ensure they don’t fall foul of the new FCA regulator.
From 1st April 2014, the Government transferred the responsibility of regulating consumer credit from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA), who want consumers to be ‘confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.’ As Roger Brown, Head of SFP advises, this transfer of responsibility is not only limited to finance companies. It may also affect schools that run in-house schemes for parents to pay fees in instalments where they charge a fee as part of the process.
“When schools allow parents to spread the payment of tuition fees, they could fall under the category of lenders, particularly if they apply any charges in connection with the process” said Roger Brown. “If so, they will need to obtain authorisation from the FCA for their regulated consumer credit related activities, and obtaining authorisation involves a rigorous application process.
“We know that a number of independent and private schools try to manage the provision of funding for fees in-house. But this could put them at serious risk of coming under the regulator’s spotlight. Schools must have obtained interim permission from the FCA before 1st April in order to comply with its conduct rules in relation to regulated consumer credit activities if they wanted to give parents the facility to pay fees in instalments. Unless they have the relevant permission and they comply with the rules they will not be able to carry out any regulated consumer credit activities.
“A more practical solution would be to involve a provider of school fee finance, like SFP. This would simplify the fee payment system and schools may not need to go through the process of applying for authorisation of course, they will still need to comply with the Consumer Credit Act and relevant parts of the Consumer Credit Directive, which apply to all lenders. As the largest school fee finance provider, SFP has the expertise and critical mass to enable schools to stay ahead of the regulatory and compliance regimes that are becoming an increasing burden on already stretched resources in the sector.”
By using SFP, part of Premium Credit and the market-leading provider of school fee finance in the UK, parents can pay their child’s school fees by monthly Direct Debit while the school receives the full fees – and any extras – direct. The extensive knowledge and experience gained by SFP through working with and supporting parents and independent schools for over 20 years makes it the natural choice for school fee finance among schools and parents alike.