Following the consultation on the FCA’s proposed consumer credit regime the trade body has revealed many advisers hold various credit licenses “purely as a precautionary measure”.
Advisers have complained that guidance from the Office of Fair Trading, the current governing body, is far from clear causing them to opt for a scatter gun approach rather than a considered strategy.
Chris Hannant, director general at APFA, said: “Since the publication of the FCA fees paper it is clear that the cost of applying for some of these licences means this will not be a viable option for ‘just in case’.
“There needs to be clarity so firms can take a sensible decision on whether a licence is needed.”
In its response to the FCA’s proposed regime, APFA has also raised the question of brokers carrying out first and second charge activity when second charges become a fully regulated activity.
It said: “Some of our members will be acting as mortgage brokers for their clients. Technically under FCA’s rules mortgage brokers do not need to hold a CCL to transact first charge mortgage business but if the best advice is to refer on to a second charge broker the position is less clear.”
Hannant added: “In general we support the move of consumer credit regulation from the OFT to the FCA but it is essential that regulation is proportionate.
“The regulator must focus on those areas that carry the greatest risk of detriment to consumers. A distinction should be drawn between firms for whom consumer credit activity is the focus of their business and those that are caught up in the market as a sideline to the firm’s main offering.”
APFA wants to discuss its response with the FCA and has asked to work with the regulator when consumer credit guidance is being drafted for the industry.
