News Press Release

Interim statement on FCA Consumer Duty and Cycle to Work

December 20, 2023

The Bicycle Association has set out its interim understanding of the potential impact of the new Consumer Duty on the Government’s Cycle to Work (C2W) tax break scheme.

This new Consumer Duty, overseen by the Financial Conduct Authority (FCA), came into force in July this year, and differing interpretations of its potential impact on the operation of the Cycle to Work (C2W) tax break scheme (separately overseen by the Department for Transport and ultimately HMRC) have raised industry concerns that, in some cases, fulfilling the scheme may become unsustainable for some in the C2W supply chain.

Listening and engaging

  • The BA has been listening and actively seeking the interpretations of suppliers, retailers and C2W providers on this complex matter, as well as liaising closely with colleagues at the Association of Cycle Traders (ACT).
  • We recognise the strength of feeling on this issue, which comes at a time when many in the industry are already facing very challenging trading conditions.

The Consumer Duty

  • From 31st July 2023 a new Consumer Duty came into force in the UK, intended to set higher and clearer standards of consumer protection across financial services. Overseen by the Financial Conduct Authority (FCA) it is far-reaching, applying across the supply chain wherever a UK business has a role in delivering “good outcomes for retail customers” in relation to regulated consumer finance. FCA resources for companies who may be affected can be found on the FCA website.
  • In the cycle sector it will apply across a range of retail finance products including credit facilities, stage payments, hire purchase, and hire and lease services over three months.

Consumer Duty and Cycle to Work – interim BA position

  • The BA has been contacted by numerous members asking whether and how the Duty applies to the Cycle to Work (C2W) tax break scheme. 
  • We are aware that across the industry there are different interpretations of the impact of Consumer Duty. Questions have arisen, for example, about whether the Duty may imply a requirement restricting retailers from determining which of their products they offer to the scheme (for example on-sale products), and whether, under the Duty, it is permissible for retailers to add a build or admin fee.
  • We believe that regulation of the C2W scheme should be fair, proportionate, clear, unambiguous and transparent.
  • With regard to Consumer Duty and its implications:
    • This is a complex issue and the regulatory aspects are difficult to disentangle from the commercial arrangements between providers and their supply chains.
    • The BA cannot, as a trade association, interfere with commercial or contractual arrangements between companies.
    • However, as the trade body, we regularly aim to offer definitive guidance to the industry on regulatory matters, for example through our “BA Guides” series.
    • But in this case, after wide consultation and with the complexities becoming clear, it is evident that official guidance from the regulator, the FCA, is required to clarify the issues satisfactorily.

What’s next?

  • The BA has approached officials at the Department for Transport to seek further clarification.
  • The BA is also seeking urgent clarification from the FCA on the issues raised by industry participants and where interpretations of Consumer Duty responsibilities differ.
  • The BA further urges the FCA to publish a sector-specific “Portfolio Letter” to address the aspects of Consumer Duty specific to the Cycle to Work scheme, as they have for other affected industry sectors here.  

C2W further context and background

  • The BA’s purpose is to grow the cycle market and a UK industry sector which already supports 64,000 jobs and contributes £7.5b in economic value. Growing the cycle industry has the potential to create tens of thousands more jobs, and billions in economic, health and environmental value.
  • Tackling the multiple issues which currently hold back growth requires an ambitious package of measures from government, supported by industry. Last month we launched our comprehensive UK Cycle Industry Manifesto setting these out, in Parliament.
  • Within such a package, the BA believes the C2W scheme can be a useful tool to bring new people to transport cycling by providing incentive and affordability support.  As such it should be safeguarded but it does require the wide support of the industry to work effectively. 
  • We recognise limitations to the scheme around its complexity and accessibility. For example, it is limited to employees on PAYE within (typically large) participating employers. We’ve called on Government for many years to extend the scheme to self-employed and retired people to make access more equitable, which we believe could be done without complexity by using the existing tax self-assessment mechanism. 
  • The BA will continue to take the message to current and future Governments that alongside the immediate need for clarification around the implications of Consumer Duty, the C2W scheme could be made less complex and more accessible, and that it is just one part of the comprehensive and ambitious package of measures necessary to secure growth in the UK cycle industry.