This is a trade facing website. Visit the ACT's consumer site for information and advice on cycling and find your local independent cycle retailer.

Search News

Results: 141-150 of 2257

3 Feb 2022

The White Paper itself includes underlying policy plans to invest in cycling networks and improve high streets

1 Feb 2022

A key objective for this year involves targeting people that are new to the industry and encouraging them to visit their friendly local bike shop

31 Jan 2022

Members of the cycling trade are meeting up this Friday (4th Feb) at a London pub "for a beer and a bit of a chinwag".

31 Jan 2022

Retailers trading in Scotland and/or Wales are reminded to check their eligibility for business rates relief from April.

31 Jan 2022

A key part of the vision will be encouraging the people of Scotland to make greater use of public transport, cycling and other forms of active travel

27 Jan 2022

Business booms by 30% when people cycle to the high street*. But they need somewhere to park. The HUDJO app gives cyclists easy access to a network of friendly hosts that provide secure and...

27 Jan 2022

 Based within ZyroFisher's Head Office, one of the country's leading distributor of cycle parts, accessories and clothing, this brand new workshop is the latest addition to the expanding...

25 Jan 2022

Located in the geographic centre of Cornwall, Devon and South Somerset in Liskeard, Fully Charged Cornwall is ideally suited for all major-routes in the South West up to Taunton in the North and...

20 Jan 2022

Getting qualified to a minimum of Cytech theory one is key for every cycle trade employee, and with up to 2/3 discount it's never...

17 Jan 2022

Thereis now less than three months until all VAT-registered retailers are required to submit quarterly VAT updates and annual returns via the government's Making Tax Digital (MTD) system....

Back to news menu

FCA fees penalise independent businesses

Posted on in Business News ,Brands & Products News , Cycles News

The FCA have recently announced significant increases in their base rate fees that will have an unfavourable effect, particularly on smaller independent retailers. However, retail finance remains the most powerful sales tool available for shops and correctly used these extra costs can easily be negated.

Applications made via the ACT's Ride it away scheme and ActSmart's retail finance scheme are now back to pre-covid levels and we are experiencing the similar growth patterns as seen prior to the pandemic.

All trends are proving that when customers want to purchase a higher ticket item that retail finance is an attractive payment method; in April and May 2020 80,000 people applied for retail finance on the Ride it away scheme alone. 

FCA changes

While there is currently plenty of positivity surrounding retail finance, the Financial Conduct Authority (FCA) who regulate the UK retail finance, have recently released their 2021/22 business plan, which includes substantial increases to the costs paid by FCA authorised retailers. The impact of these increases are now starting to be seen by retailers as the latest invoices are being sent out.

Any business authorised by the FCA to introduce customers to regulated finance, known as limited permission secondary credit brokering, will be affected.

Until now limited permission firms in the lowest fee bracket paid a base rate of £106p.a. However, the FCA have decided that small firms, who currently pay a minimum fee, should now pay an increased amount to "make a contribution to the costs of regulating them that more fully reflects the costs associated with FCA authorisation and ongoing supervision." (FCA regulated fees and levies: rates proposals 2021/22, p.4 pt.1.8).

The new consumer credit base rate for smaller firms is £250 per year, a 135% increase of £144. According to the FCA, these revised fees for 2021/22 are "the first stage to bring greater alignment of these minimum fees with other authorised firms who currently pay a minimum fee of £1,151". This would suggest more increases are to follow until limited permission fees match other authorisations.

This increase in base rate fees will have more of an impact on smaller businesses as they are less able to absorb the increase. One of the key FCA mission statements is to ensure ‘customers are treated fairly', although this increase in cost is likely to cause many smaller businesses to cancel their authorisation and thus will be offering consumers less choice, not more.

There is now an online course availble to get yourself and your staff properly trained on how to use retail finance effectively, resulting in increased sales and profits. 

Try the Retail Finance Training demo for free

FCA demand more oversight of Appointed Representatives by Principle businesses

Another consequence of the FCA fee structure increase makes becoming an Appointed Representative (AR) business more attractive. ARs are not directly authorised by the FCA so don't pay fees directly to the FCA. Instead, they have an agreement with another business, the Principle, who is authorised by the FCA to use their permission. The Appointed Representative service was recently launched by the ACT whereby the ACT acted as the Principle and retailers authorised could avoid paying additional FCA fees.

However, as part of the 2021/22 review the FCA identified "failings included insufficient oversight of their ARs and inadequate controls over the regulated activities for which they have accepted responsibility".
Rather than taking direct action against only those Principle firms that hadn't been regulating their ARs sufficiently, the FCA have decided to charge every Principle £250 for each AR they have.

The new £250 fee per AR, will make it less feasible for Principle businesses to appoint smaller independent firms. The increased fees and oversight requirements have meant that unfortunately the ACTs own AR scheme has been terminated.

"We are disappointed with the FCA's decision" 

Chris Hall, ACT Director said "the ACT undertook significant amounts of work, resource and time to create the AR service for our members, that we considered a ground-breaking service to enhance our already market-leading cycle finance product - Ride it away - which reached sales of £140M over the last 12 months.

We are disappointed with the FCA's decision to penalise all Principles rather than just those who failed to provide proper oversight and would like to ensure our members are aware this is an external factor that we have no control over.

With this is mind, I would still like to reiterate the importance of retail finance as a sales tool to cycle shops and firmly believe that is a profitable asset to businesses when used effectively."

Why retail finance is still an asset to your business

Ride it awayDespite the increased FCA costs retail finance remains the most powerful sales tools for retailers.

In June 2021, returning customers using the ACT's Ride it away scheme accounted for 13%, meaning that 87% were new customers using finance as an alternative payment method.

Furthermore, since January 2019, the yearly average loan amount has risen by 54%. Based on this and the evident non-availability of lower ticket bicycles, it's obvious customers want alternative methods to pay for higher value purchases.

The ACT's retail finance scheme are currently influencing hundreds of thousands of pounds worth of UK bicycle purchases every day.

Train your staff to deliver finance effectively

Retail Finance Training, brought to you by Indie Retail Training, is an online learning course delivering an informed insight into Retail finance that can be completed anywhere, in your own time.

This course is designed for all owners and employees in a business that either currently, or plans to, offer retail finance as a payment method.

The course will teach you how to legally promote and use retail finance in-store, online and in all other forms of media. As well as covering the legal details this course also aims to make sure you maximise each sale using retail finance.

The cost to access the course is £150 including VAT. ACT members receive preferential pricing with up to 50% off.

Try the Retail Finance Training demo for free

Or find out more about the full course. 

Back to news menu

Useful links

If you have any other queries please contact us.