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FCA to consult on issue of unsolicited marketing in consumer credit market this summer

The Financial Conduct Authority (FCA) is to consult on the issue of unsolicited marketing by consumer credit firms this summer, according to an answer given in the UK parliament.

In response to a question from Lord Alton of Liverpool, commercial secretary to the Treasury Lord O'Neill of Gatley, a former chief economist at Goldman Sachs, said the FCA will look to determine whether unsolicited marketing activities should be prohibited under its consumer credit regulatory regime.

"The Financial Conduct Authority has committed to undertake a consultation on unsolicited marketing calls, emails and text messages from consumer credit firms, including payday lenders," Lord O'Neill said. "This will take place in the summer. The consultation will include specifically looking at whether these unsolicited communications should be banned, given the potential for causing significant distress to consumers."

"The FCA requires that cold calling by phone, text or email makes both the identity of the firm clear, as well as the purpose of the communication, so the consumer can decide whether to proceed," he said.

Earlier this year, new rules were brought into force to make it easier for the Information Commissioner's Office (ICO) to serve fines against businesses that breach the Privacy and Electronic Communications Regulations (PECR). Previously, the ICO had to prove that unsolicited calls or texts caused "substantial damage or substantial distress" before it could issue a fine. However, that threshold has now been removed.

The change only applies to serious breaches of PECR that occurred on or after 6 April this year when the new rules came into force. To be justified in serving a fine for a serious breach of PECR, the ICO must show that the breach was either deliberate, or that the person acting in breach knew that their actions risked breaking the rules but failed to take reasonable steps to prevent the breach happening.

Under PECR, companies are generally prohibited from transmitting or instigating the transmission of unsolicited electronic communications to consumers for the purposes of direct marketing unless the person receiving those communications has given prior consent for the messages to be sent or the sender can demonstrate an existing commercial relationship with recipients. Companies are also prohibited from disguising or concealing their identity in the messages, or from providing an invalid address preventing recipients from opting out of the messages.

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