IFAC update on the correct mortgage consumer credit permissions.
The FCA sent an email yesterday to IFAs with the permission of debt counselling with no debt management permission.
In the update it explains that all firms with this permission are being contacted, and it offers a new definition of debt management. It is this new definition of debt management that is throwing the industry into confusion. IFAC have received enquiries about this and offer this piece as an update.
The reason that so many mortgage brokers require this permission is not simply because they may roll up credit card debt into a mortgage. Rather more it is because the providers - banks and building societies and packaging firms, insist on this permission before accepting their business. So to an extent researching the correct permissions becomes more an exercise on researching what other people believe are the correct permissions.
The FCA email sent yesterday indicates that most mortgage brokers now have the wrong limitation on their permission.
Worse still in many cases it is the FCA who insisted on this limitation in the first place.
The limitation is to stop those debt counselling from carrying on debt management.
But the new definition of debt management below in bold apparently includes debt counselling, making a mockery of this limitation. Undeterred the FCA issue this threat in their email: â€œThere could be serious consequences for not having the right permissionsâ€
The new definition of debt management, the FCA say is "the activities of debt counselling or debt adjusting, alone or together, carried on with a view to an individual entering into a particular debt solution or in relation to any such debt solution, and activities connected with those activities".
A debt solution is defined as "an arrangement, scheme or procedure, whether statutory or not, the aim of which is to discharge or liquidate a customer's debts".
So this makes a nonsense of the limitation, because sweeping credit card debts into a mortgage would clearly fall into the FCAs new definition of debt management. The Consumer credit permissions regime is fantastically complicated with over 64 different versions of the simple permission to handle consumer credit.
The three permissions that IFAs and mortgage brokers need in order to continue to provide mortgages are these Credit Broking Debt Counselling; Debt Adjustment or adjusting IFAC help firms with their permission changes and help hundreds of IFAs and mortgage brokers as their compliance manager, see more here Our Services