Does a golf club offering members to pay by direct debit for their membership fees need to apply for consumer credit licence consequently FCA registered?
Many golf club treasurers all over the UK come across this question when they are exploring the idea of offering members to pay membership fees in stages rather than the total amount at the time of the renewal.
A consumer credit licence is basically required when you are extending credit facility to individuals therefore there are rules to govern this area set and monitored by FCA. For example, Fairway Credits’ instalment plan falls right into this category hence they are required to be FCA regulated. However if a golf club simply decides to offer its own members different fee paying structures:
- Annual payments*1
- Quarterly payment *4
- Monthly payments* 12
You are not offering any credit facility in this instance especially if the amount in total in all three options are the same.
Some golf clubs levy an administration fee for paying direct debit as there are costs involved in implementation such scheme. It is advisable keep the admin charge the same for all three options above just to avoid being deemed as applying interests to any of the three options.
For example if your club membership fee at the moment is £1200 annually, the three options you can offer will be:
- Annual payment of £1,200*1
- Quarterly payment £300*4
- Monthly payments£100* 12
GMCA’s April 30th 2015 article states the following:
“The good news is that they clarified that clubs may offer a direct debit facility to members, without requiring FCA Authorisation, provided the agreement runs for no longer than 12 months. However, it was emphasised that no charge of any kind can be made against the member for this service. It was recognised that operating a direct debit scheme was a cost to the club but Martin Goulden was adamant that none of this cost could be recouped from the member. He said that the FCA had no powers to alter this as the principle was written into the Legislation and would require Government intervention to affect any changes.
Martin Goulden did say privately that some clubs, dependent on their constitution, may not require FCA Authorisation to charge members for the direct debit facility. If the club and the membership were the same entity then it would not be deemed to be providing credit as the club would be lending to itself. When asked to elaborate on this Martin Goulden would not comment further and stated that legal advice should be sought before a club employs this option.”
If you are a Golf Club or have any further questions relating to FCA regulations then please don’t hesitate to get in touch with one of our team. We are here to ensure all our existing and potential clients fully understand the regulations and can remain compliant. Or you can stay up to date and find additional information and updates on our social media pages, LinkedIn, Youtube, Twitter, Facebook and Google+.
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