Do you need a separate Consumer Credit Licence for your practice? We don’t have a definitive answer, but we do have some information for you and some questions you should ask.
ACCA, ICAEW, ICAS, ICAI and The Law Society all have Group Consumer Credit Licences covering consumer credit, credit brokerage, and debt adjusting and debt counselling activities. The Law Society’s licence also covers debt collection. These licences are limited to activities undertaken in the course of a member’s practice as an accountant, solicitor or IP, and for businesses or practices entitled to call themselves Chartered Accountants, Chartered Certified Accountants or solicitors. There is also a separate Group Consumer Credit licence for the profession as a whole, which covers IPs when they are acting as office holders, and so means that DTI and IPA licensed IPs are covered by a Group Licence.
These Group Consumer Credit Licences mean that all IPs are covered for the work undertaken as an office holder and, if you are a member of the accountancy bodies or the Law Society, also for any work arising in the course of the practice of accountancy or as a lawyer. But is any work undertaken as a general debt advisor, particularly in respect of IVAs, covered?
Our thoughts on this are that for IPs who are members of the accountancy bodies and the Law Society, insolvency advice work, including pre-IVA advice work, is probably covered by the Group Licence because it arises in the course of acting as an IP. General debt advice work is not covered as it does not arise in the course of acting as an IP. The distinction is blurred, but it is best illustrated by a consumer debtor who approaches an organisation that offers a range of solutions to their financial problems such as secured loans or debt management plans, and including IVAs. At the initial stage it is unclear as to what solution is best for the debtor, and until it is decided that an IVA or bankruptcy offers the best solution, then that is general debt advice work and is not covered by the Group Licence. In view of the uncertainty, we would suggest that, particularly if you are involved in offering a range of solutions to consumers, you contact the OFT for further advice, setting out exactly the extent of the advice work you undertake and see what their response is before deciding whether you need a separate Consumer Credit Licence for your practice.
For IPs who themselves are not members of the accountancy bodies or the Law Society, or whose firms are not members, then since you are only covered by the profession’s Group Licence and that “is limited to activities ..... in pursuance of the duties imposed upon them by virtue of ...” a formal insolvency appointment, then our thoughts are that you are not covered for any pre-appointment work, either insolvency advice or general debt advice. Consequently we suggest that you contact the OFT for further advice as to whether you do need a licence.
A Consumer Credit Licence currently costs £485 per annum, or £335 if you do not charge a fee or commission for debt counselling work, and you can get further information on how to apply, and can make enquiries as to whether or not you need a separate licence at http://www.oft.gov.uk/advice_and_resources/resource_base/credit-licence/.
