The Association of Professional Financial Advisers (APFA) has responded to the Financial Conduct Authority (FCA)’s consultation on its proposed consumer credit regime, calling for further guidance on what the regulator considers to be consumer credit activity.

Chris Hannant, director general at APFA, said: “There is considerable uncertainty about whether or not financial advisers require consumer credit licences for their usual activities. Our belief is that many will not. Guidance from the Office of Fair Trading (OFT) is far from clear, meaning that many advisers currently hold licences for various consumer credit activities purely as a precautionary measure.

“However, 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 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.”