RegulationSep 19 2013

Fresh confusion as PosSol says all advisers need CCL

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Confusion over whether or not financial advisers must hold a consumer credit licence continues to reign, with guidance given to members of former Aegon-owned advisory network Positive Solutions stating that all advisers must hold a licence.

Guidance made available to members of the network, seen by FTAdviser, states that all members must get a consumer credit licence, warning them they will be “breaking the law” if they do not get a licence that covers the correct categories.

The note, which also states that member firms cannot be covered under the parent network’s licence because their advisers are not direct “employees” of Positive Solutions, adds that all advisers require a licence “to be able to talk to clients about their full financial situation, including their debt arrangements, and to be able to introduce or refer clients to other brokers”.

Shaun Proudlove, compliance director at PosSol parent company Intrinsic, said: “It is essential that, where required, all appointed representatives in the Intrinsic Group have a consumer credit licence for their firm, and that all registered individuals (including advisers in Positive Solutions) are covered by a valid firm or individual licence.”

A source close to the firm told FTAdviser that PosSol’s stance was in line with guidance being consulted on by the Financial Conduct Authority and that all financial advisers across the sector would likely need to hold a valid licence.

However, an email from the network’s compliance to members, also seen by FTAdviser, cautions advisers not to rush to get an interim licence from the FCA to take advantage of a early registration discount pending further clarifications arising out of the regulator’s consultation.

From September, financial advisers that have a licence will need to register with the FCA for ‘interim permission’ to continue any activities covered by the rules after April 2014, when this falls under the FCA’s remit.

The government recently clarified that those purchasing interim licences - priced at £150 for sole traders and £350 for other firms - will be refunded for permanent licences acquired from the Office of Fair Trading. It also confirmed those that take out a licence before November will receive a 30 per cent discount.

Previously when FTAdviser spoke to the FCA and the OFT about whether advisers needed a consumer credit licence, it was apparent neither knew the answer. Both regulators stated that advisers should take independent legal advice.

Some advisers will definitely qualify if they advise on certain types of mortgages or offer debt management services. Some have asked whether general holistic financial planning that would inevitably cover clients’ debts would be covered by this rule.

Waters are muddied further in relation to charging structures. It has been said by some that advisers charging clients a quarterly retainers need a consumer credit licence, as will those that spread initial fees over time and therefore effectively offer their services as credit.

The FCA said that it did not know if the above examples would qualify. The OFT said simply that it could qualify, but that it was not possible to give a “one size fits all” response and that it would be taken on a case-by-case basis.