Cash America 2013 Annual Report Download - page 45

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payment authority to pay off a loan. On February 28, 2014, the FCA published the Consumer Credit Sourcebook (the
“CONC”) within the FCA Handbook that contains the final prescriptive regulations that will cover the conduct
requirements for lenders of unsecured credit such as the Company. The Company conducting a review and assessment
of the newly published final regulations set forth in the CONC to evaluate and determine the potential impact of the final
regulations included in the CONC and what effect such regulations may have on its business, prospects, results of
operations and financial condition. If the final FCA regulations included in the CONC are consistent with the proposed
rules, the Company will be required to make adjustments to some of its business practices, including its collections
processes, which could possibly result in lower collections on loans made by the Company and a decrease in the number
of customers that it is able to approve.
In addition, on December 18, 2013, the United Kingdom passed the Financial Services (Banking Reform) Act,
which includes an amendment that requires the FCA to introduce rules “with a view to securing an appropriate degree of
protection for borrowers against excessive charges” on “high-cost short-term” consumer loans by January 2, 2015 and could
result in fee, cost of credit or other restrictions being adopted by the FCA. For recent developments related to the FCA
and the OFT, including the OFT’s May 3, 2013 letter to the Company concerning the OFT’s recent examination of
the Company’s business and containing findings that the Company may not be fully compliant with the
Irresponsible Lending Guidelines or the CCA or other relevant law and guidance and its request that the Company
rectify the matters identified in the report, see “Item 1A. Risk Factors—Risks Related to the Company’s Business
and Industry—
The OFT is reviewing the payday lending sector in the United Kingdom, including the Company,
which could result in changes to the Company’s business processes or payday lending products
” and “— The United
Kingdom has recently increased regulation of the consumer loan industry as well as demonstrated an increasing
interest in considering legislation or regulations that could further regulate or restrict the consumer loan products
the Company offers
.”
In Australia, the Company must comply with the responsible lending guidelines under the National
Consumer Credit Protection Act (2010) (“NCCPA”), which was amended in 2012. The amendment includes
limitations on permissible fees charged on certain consumer loans, including consumer loans made by the Company.
The Company has recently altered the product it offers in Australia. The Company is still assessing the impact that
the changes will have on its business in Australia, but the Company expects the product offering will be less
profitable. If the reduction in profitability is such that the Company’s product offering is not sustainable, it may
need to exit Australia if the product cannot be further modified in a way that retains profitability in that country. If
the Company has to exit Australia, it will not have a material effect on the Company, including its consolidated
revenue or operations.
In Canada, all regulation of the consumer lending industry is conducted at the provincial level. In general,
the regulations require lenders to be licensed, set maximum fees and regulate collection practices.
Check Cashing Regulations
The Company offers check cashing services at many of its pawn lending locations and consumer loan storefront
locations. Some states require check cashing companies to meet minimum bonding or capital requirements and to
comply with record-keeping requirements. Some states require check cashers to be licensed and have adopted ceilings
on check cashing fees. Failure to observe a state’s legal requirements for check cashing could result, among other things,
in a loss of the check cashing license in that state, the imposition of fines or customer refunds, and other civil and/or
criminal penalties. In addition to state regulations applicable to check cashing companies, the Company’s check cashing
activities also must comply with applicable federal regulations. The principal federal regulations governing check
cashing operations are described in “U.S. Federal Regulation” above. The Company’s franchising activities are subject
to various federal and state regulations that, among other things, mandate disclosures to prospective franchisees and
other requirements.
Industry Best Practices
The Company is a member of the Community Financial Services Association of America (the “CFSA”) in the
U.S., the Online Lenders Alliance (“OLA”) in the U.S. and the Consumer Finance Association (the “CFA”) in the U.K.
These associations have developed guidelines or best practices for responsible lending for their members to follow that
often have more extensive requirements than federal, state and local regulatory requirements with which the Company is