< p>A recently published Memorandum defined the differences between the FCA and the Lending Standards Board.

The watchdog has reported on the responsibilities of both its own Authority and the LSB, a self-regulatory lending code, pin-pointing areas where powers overlapped between them.

The FCA stated in the memorandum that the LSB has “not been reviewed by the FCA and is not FCA Confirmed Industry Guidance.”

While the FCA’s powers are derived from primary and secondary legislation, LSB’s powers are only derived from firms that subscribe to its code of conduct. However, as both bodies have regulatory interest in the same areas, such as payment services, appropriate information and treating customers fairly, unfair contract terms and financial difficulties, the regulator defined where each body’s powers are derived from.

The report stated that both the FCA and LSB recognise the need to promote a monitoring and supervisory approach within the areas of overlap, however they need to avoid “undue duplication of investigation and enforcement”. The FCA added that it will “take into account of the work being performed by the LSB” and that if an issue arises that may require action from either of the two bodies, they “may consult each other to agree which is best placed to take action in the first instance.”

However, it was stated that nothing in the Memorandum restrains the regulator’s discretion to take action in areas of overlap.

The report set out rules where the FCA and the LSB to seek to:

Co-operate in a timely way with regard to their respective roles

Maintain general awareness and understanding of each other's functions

When there is an area of overlap, they must share good practice in monitoring and enforcement methodology

Arrange to meet when necessary, including regular meetings at staff level and annual meeting at senior management level

Staff level meetings will take place at least quarterly and on an ad hoc basis if necessary. These may include discussion of the quality of compliance in areas of overlap and will review progress in dealing with any specific issues.

The LSB is also expected to notify the FCA of information that infringes an FCA rule or gives “rise to potential concern” in an area of overlap if it becomes apparent to them. The FCA is expected to notify the LSB of information that may “warrant investigation” by the LSB.

It was stated that either bodies could terminate the Memorandum at any time, but will need to give reasonable notice.

Robert Fiefth, Chief Executive of the LSB stated that the Memorandum will “certainly not diminish either of our powers”, adding that it will “help us understand what each other is working on and helps us with our independent work.”

Robert stated that they had previously signed a Memorandum with the OFT and the FSA, and so it is a renewal of the Memorandum with the FCA.

Robert added its key use: “We can brief [the FCA] on our monitoring programme…it is designed to avoid duplicating our work.”