The Association of Professional Financial Advisers (APFA), the principal trade association for financial advisers, has responded to a consultation paper from the Financial Conduct Authority (FCA) by urging the regulator to act in three key areas.

On October 31 2013, the FCA published Consultation Paper 13/14 regarding the proposed fees and levies for authorised firms in 2014/15.

One of the proposals is to merge two fee blocks used when calculating a firm’s authorisation fee. Block A12 is for advisers, arrangers, dealers or brokers who hold client money or assets, and Block A13 is for advisers, arrangers, dealers or brokers who do not hold client money or assets. In the paper, the FCA acknowledges that this step is necessary “to remove an anomaly”.

APFA has asserted that this amounts to an acknowledgement that firms falling under the A13 block “have been picking up a greater share of the bill than they should have been.” The trade association has thus asked the FCA to reduce the 2014/15 fees for these firms accordingly.

Next, APFA’s response addresses Money Advice Service (MAS) funding, which is a thorny issue for financial advisers at present. The advisory community is still required to pay levies to fund MAS, the body that was set up by the Government to offer general advice on financial matters to the public, even though the performance of this organisation has been much criticised. Here APFA calls for a closer link between usage rates of MAS amongst the general public and the way the organisation’s funding costs are allocated.

The third issue the submission addresses is whether financial advisers who do not sell consumer credit products require consumer credit authorisation, on the basis that they may sometimes give generic advice to customers concerning their debts. Many advisers are understandably reluctant to pay the additional costs of consumer credit authorisation in the absence of a definitive statement that this is required. However, Positive Solutions, one of the largest financial adviser networks, has asked all its members to obtain a Consumer Credit Licence.

In a webinar of December 2013, FCA chief operating officer Lesley Titcomb said not all financial advisers require a consumer credit licence, or will require consumer credit authorisation come April 2014, but did not give details of the circumstances in which these firms may or may not require a licence.

Also on the subject of consumer credit, APFA commented that many smaller firms for whom credit was an incidental activity would have difficulty in identifying their exact amount of income derived from credit activities. In view of the fact that initial FCA fees for consumer credit authorisation will be dependent on a firm’s turnover from credit activities, the trade body has asked whether it will be sufficient for these firms to issue a declaration that their credit turnover is below £50,000 or below £100,000.

The deadline for responses to the consultation paper passed on January 6 2014.