Cash America 2012 Annual Report Download - page 74

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was amended by the Consumer Credit Act of 2006 (collectively, the “CCA”), among other rules and regulations. In
December 2012, the U.K. Parliament passed the Financial Services Act of 2012 (the "Act"), certain provisions of which
take effect on April 1, 2013 and April 1, 2014. The Act makes changes to the CCA and the Financial Services and
Markets Act of 2000 (the “FSMA”) and gives the OFT the power to suspend consumer credit licenses with immediate
effect or from a date specified. The Act also creates the Financial Conduct Authority (the “FCA”), which will take over
responsibility for regulating consumer credit from the OFT in April 2014. The FCA may regulate consumer credit
pursuant to the guidance of the FSMA, which includes prescriptive regulations that currently govern the secured credit
market and could possibly call for the repeal of the CCA or for enabling legislation in the United Kingdom. Prescriptive
regulations, as contrasted with principles-based regulations that currently regulate the lending process in the United
Kingdom, define what a lender may and may not do with a specific product, similar to U.S. law. However, the U.K.
coalition government has reserved the option to retain the principles-based CCA provisions should it conclude that a
regulatory model for unsecured consumer credit under the FSMA and FCA cannot be delivered in an effective
regulatory manner. During the period of transition of regulatory responsibility over consumer credit from the OFT to the
FCA, the OFT will continue to fully and rigorously regulate consumer credit, including the short-term consumer loan
market. If prescriptive regulations are adopted, the Company’s compliance costs will be significantly increased.
In addition, in October 2011, the OFT issued debt collection guidance that was revised in November 2012. This
debt collection guidance allows consumer lenders such as the Company to debit a customer’s account, which includes
debits to both bank accounts and debit cards, in a “reasonable and non-excessive manner.” The Company has not
experienced a material adverse impact on its business as a result of this guidance.
In February 2012, the OFT also announced that it had launched a review of the payday lending sector in the
United Kingdom to assess the sector's compliance with the CCA, the OFT's Irresponsible Lending Guidelines and other
relevant guidance and legal obligations. The OFT has announced that these inspections could be used to assess a
licensee's fitness to hold a consumer credit license and could result in formal enforcement action where appropriate. The
OFT is expected to announce its findings during the first quarter of 2013. It is unknown if the OFT’s findings will result
in significant changes to the Company’s operations, business, and prospects.
Consumer Financial Protection Bureau
In July 2010, the U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the “Dodd-Frank Act”), and Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau
(the “CFPB”), which regulates consumer financial products and services, including certain short-term loans offered by
the Company. On January 4, 2012, President Obama appointed a Director of the CFPB in a recess appointment
bypassing Senate confirmation. Although there remain doubts about the legality of this appointment and the appointment
is subject to legal challenge, the CFPB has begun exercising supervisory review over certain non-bank providers of
consumer financial products and services, including providers of consumer loans such as the Company. The Dodd-Frank
Act gave the CFPB, among other things, authority to examine and require registration of providers of consumer financial
products and services, including providers of consumer loans such as the Company; the authority to adopt rules
describing specified acts and practices as being “unfair,” “deceptive” or “abusive,” and hence unlawful; and the
authority to impose record-keeping obligations. The Company does not currently know the nature and extent of the rules
that the CFPB will consider with respect to consumer loan products and services such as those offered by the Company
or the timeframe in which the CFPB may consider such rules. Although the CFPB does not have the authority to
regulate interest rates, it is possible that at some time in the future the CFPB could propose and adopt rules that require
certain changes to short-term consumer lending products and services, including certain short-term loans offered by or
through the Company, which could make these products and services materially less profitable or even impractical to
offer and could force the Company to modify or terminate certain of its product offerings. The CFPB could also adopt
rules imposing new and potentially burdensome requirements and limitations with respect to other consumer loan
products and services. Any such rules could have a material adverse effect on the Company’s business, results of
operations and financial condition or could make the continuance of all or part of its U.S. consumer loan business
impractical or unprofitable.