Fees for consumer credit licences will rise from 1 May 2009, the OFT has announced today.
The fee increase follows changes to the OFT’s powers from April 2008, which allow it greater ability to focus on businesses engaged in credit activities that pose a high risk to consumers.
In the first year of operation of this new regime, a significant number of licence applicants fell into categories requiring a higher level of scrutiny, increasing costs for the OFT.
The greater scrutiny given to applicants who want to engage in higher risk activities, such as debt collection and secured sub-prime lending, can include site visits, staff interviews and compliance reviews.
The OFT can also use a wide range of enforcement powers and sanctions provided under the new regime to help bring about improvements in a licensee’s conduct.
The consumer credit licensing and enforcement system is required to be self-funding on the basis of full cost recovery across its whole operation.
From 1 May 2009, the following fees will apply:
Application for or renewal of a standard credit licence for sole traders will now cost £330 for a five-year period, an increase of £20 per annum.
Application for or renewal of a licence for all other applicants will now cost £820 for a five-year period, an increase of £49 per annum.
The cost of amending details of an existing licence is unchanged (£80 for the large majority of variations).
The levy imposed on those licensees covered by the Consumer Credit Jurisdiction of the Financial Ombudsman Service remains £150 for a five-year period.
Ray Watson, director of consumer credit at the OFT, says: “We want to impose the minimum burden on fit and competent businesses while ensuring we have the necessary resources to protect consumers, especially in tough economic times when the risks they face are high and the consequences of poor practice most serious. The new fees strike the right balance.”