The Association of Professional Financial Advisers (APFA) has called for clear guidance from the Financial Conduct Authority (FCA) on what it considers to be consumer credit activity and for which activities advisers need to have a licence.
In its response to the FCA consultation on the proposals for its consumer credit regime, APFA called for the FCA to outline the 'perimeter' so that firms can decide whether a licence is needed.
APFA said it had asked FCA a number of questions around the definitions of consumer credit activity but was "yet to get a response".
APFA said: "There is uncertainty in the intermediary sector about the need for a consumer credit licence (CCL) at all for the usual activities carried out by financial advisers.
"The Office of Fair Trading (OFT) guidance is far from clear with the result that some firms in our membership currently hold licences covering several consumer credit activities purely as a precautionary measure lest, in the course of advising a client, they stray into an area of consumer credit activity."
APFA continued to say that paying for a licence 'just in case' was not an economical option for advisers.
It was still unclear, APFA said, under what circumstances advisers would need to continue to hold consumer credit licences for credit broking and debt counselling.
Looking at client's debt was an important but "obviously ancillary" part of investment advice, APFA argued, and the FCA should outline what triggers debt counselling.
APFA asked the FCA to provide guidance on the treatment of fees that are paid across time and whether regular monthly payments made to the advisers would require the adviser to hold a CC licence.
It was also unclear at what point advisers needed a CC licence for advising on mortgages, with "consumer credit requirements now [representing] a layer of duplication and regulatory burden that is unnecessary in this area," APFA said.
It wrote in its response: "A distinction should be drawn between those firms that conduct consumer credit activity by way of business and those that are caught as an ancillary to the firm's main offering.
"We are concerned that our members have already had to pay for interim authorisation ahead of the switch of regulator from the OFT to the FCA and will also be subject to a full consumer credit authorisation application fee and annual ongoing costs.
"This has been particularly difficult for firms that recently paid the OFT for an indefinite licence expecting not to face further costs until the maintenance fee fell due.
"Firms that are regulated for their main business are already subject to an ever increasing cost of regulation and this additional cost is not welcome when consumer credit activity generates little or no income".
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