Do Mortgage Firms Need ‘Debt Counselling’ Permission when Recommending Debt Consolidation?

The FCA have issued a clarification in June 2016 that, in their view, firms offering debt consolidation mortgage advice could also be carrying on credit-related activities (refer to PERG 2 for further guidance). For example, a broker may recommend
that a debtor should consolidate only certain unsecured debts due under credit agreements into a regulated mortgage contract and the exclusion in Article 39J of the RAO might not be available as in line with Q5.1 in PERG17.5 (see link below).

https://www.handbook.fca.org.uk/handbook/PERG/17/5.html

The FCA has said that even implicitly steering the customer to a particular course of action will constitute advice for the purposes of the regulated activity of debt counselling. Firms are responsible for ensuring they have the appropriate permission in place at all times for the regulated activities they carry on.

Firms which require the debt counselling permission can apply for a variation of permission (VoP) through the FCA’s Connect system.