The FCA has taken the extraordinary step of revising its proposed consumer credit application fee structure, despite the original proposed structure still being under consultation itself.
A 7-page paper published today (16 December) by the regulator, reveals a revised structure to the original 104-page CP13/14 paper published in October following feedback from a series of ten ‘roadshows’ held during November.
The new structure will include an overlay based on a firm’s income to prevent smaller firms with revenues of below £50,000 being forced to pay fees for the two-yearly licences of up to £15,000. The previous categorisation was based solely on the complexity of the firms activities.
The FCA takes over consumer credit regulation from the Office of Fair Trading from next April, and had drawn criticism from advisers who had already paid for lifetime OFT licences and were now expected to pay for FCA consumer credit permissions.
The revised consultation paper states it had become clear from discussions at the roadshows that the proposed application fees “might constitute a significant barrier to entry for some small firms”.
It adds: “Rather than wait until we provide formal feedback after the consultation period closed, we decided it would be more helpful to firms to issue amended proposals as soon as possible.”
The consultation period for consumer credit licence fees is also extended from 6 January 2014 to 16 January.
The original consultation paper banded firms seeking full consumer credit permissions in four categories: straightforward, moderately complex, complex and very complex, with fees ranging from £1000 to £15,000.
That paper had said the FCA expected small firms would fall into the straightforward category, however feedback revealed this would often not the case, with a large number of small firms, including firms with incomes under £50,000, falling into the higher fee bands.
The original proposed fee structure is detailed in the table below:
| Type of authorisation | Services offered | Proposed fee |
| Straightforward | Credit broking, providing credit information services | £1000 |
| Moderately complex | Entering regulated credit agreements as a lender | £5000 |
| Complex | Lender services, debt adjusting and debt counselling | £10,000 |
| Extremely complex | Lender and debt services, providing credit references | £15,000 |
In contrast, the revised proposals for a fee structure take into account the size of the business, with charges scaled in line with a firm’s income that is related to consumer credit activities. The FCA has also merged the complex and very complex categories.
Proposed fees will now range between £600 to £1,000 for companies with incomes up to £50,000, rising incrementally to between £5,000 and £15,000 for firms earning more than £1m.
The paper stated: “We are mindful of the need to set fees at a level that should not unduly prevent firms from entering the market.
“Excluding small firms from the market would reduce the range of choices available to consumers and restrict opportunities for entrepreneurial start-ups to challenge existing market participants.”
Chris Dunston, chartered financial planner for Devon-based Artavia PFS, said: “It seems that the FCA has listened and taken action. The advisory community has been able to convince the regulator that there is a fairer way of doing things on this occasion.”
Meanwhile, the FCA has confirmed that advisers who held OFT consumer credit licences will start to receive rebates from January 2014.
