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Apfa to set out when advisers need a consumer credit licence

Apfa is to issue guidance on whether advisers need a consumer credit licence following the publication last week of the FCA’s final consumer credit rules.

The FCA will take over regulation of consumer credit from the Office of Fair Trading on 1 April. Firms must apply for interim permission from the regulator by 31 March.

In December, Apfa said more guidance was needed on what was deemed to be “debt counselling” and on whether a CCL was needed if firms allowed clients to spread the cost of advice. The trade body says many advisers have a licence only as a “just in case” provision because they are uncertain of the rules.

In the final rules, the FCA says “generic advice” is not deemed to be regulated debt counselling. 

But it adds that firms must decide for themselves whether they are carrying out regulated activity because this will depend on the context of the advice.

Apfa director general Chris Hannant says the crucial issue is whether advice is specific.

He says: “Recommending that a client pays off all their debts would not be considered regulated debt counselling but recommending that a specific debt is paid would be.”

He adds: “Advisers need to make a decision about their business so for the FCA to give only one month’s notice is very far from ideal.”

Apfa will also set out how spreading the cost of advice affects the need for a CCL. It will publish a guidance note for members shortly.

Aurora Financial Planning chartered financial planner Aj Somal says: “Many advisers are uncertain of the rules but most will have made their decision by now as the deadline is so close.”

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