The Financial Conduct Authority (FCA) has revised its application fees for firms seeking full consumer credit authorisation, after it realised that small firms were facing "significant barriers to entry" due to cost.
The move is designed to enable smaller firms to enter the consumer credit market without having to fork out the minimum £1,000 fee or more.
Advisers mainly need consumer credit permissions for giving mortgage advice, debt counselling or credit broking services.
However, they may also need the extra permission when charging their fees in installments over a period of time, as they may be entering a 'credit agreement'.
Today's FCA paper proposes to calculate firm's application fees on the basis of the complexity of their application as well as the size of their turnover.
Under the proposals, which will be consulted on parallel to the consultation on consumer credit fees announced at the end of October, the smallest home collected credit lenders and debt management firms would pay a fee of £1,000 while the smallest brokers would pay £600.
The FCA said it had altered its original proposals because it realised that too many small firms would fall into the more complex categories, potentially being hit with fees of up to £15,000.
It said: "We proposed [the original] structure because we believed small firms would fall into the ‘straightforward' category.
"It has become clear that this is not the case. A large number of small firms, including firms with incomes under £50,000, would fall into the higher fee-bands.
"For such firms fees of £5,000 - £15,000 might constitute a significant barrier to entry. We are mindful of the need to set fees at a level that should not unduly prevent firms from entering the market."
FCA chief operating officer Lesley Titcomb said: "Since we announced the proposed consumer credit application fees in October we have been listening to the people we met at roadshows, as well as others providing their thoughts on the consultation.
"We appreciate that small firms already face a number of challenges so we want to ensure that they can continue to operate successfully under FCA regulation."
The FCA has also proposed to merge the ‘Complex' and ‘Very complex' categories and will restrict fees for the largest firms to £15,000, as originally proposed for the most complex applications.
The Association of Professional Financial Advisers (APFA) recently called on the FCA to clarify under which circumstances advisers would need a licence, saying it was not currently clear.
The FCA has extended its consultation on turnover-based fee scaling to 16 January 2014, and the wider consultation will close as planned on 6 January.
