Major franchised dealers could be hit with demand for up to £7,500 in fees when they file their consumer credit application to the Financial Conduct Authority.

Louise Wallis, head of business development at the National Franchised Dealers Association, said it has discovered that dealers applying for full FCA permission because they already have that permission for insurance are actually being categorised in the FCA’s ‘complex’ category which incurs higher costs.

That makes them liable for FCA application fees of £3,750 if their annual income from consumer credit exceeds £250,000 and £7,500 if it exceeds £1 million.

Wallis said this is because they are applying for variation of permission with categories D and E for debt management and debt counselling.

Such categories are necessary in order for dealers to settle outstanding finance on part-exchange cars when the customer wishes to change.

“This is a real issue because we’ve suddenly discovered that fees are coming into the thousands of pounds, which we thought would be much lower.

“We’re talking to the FCA about it but it seems there’s a glitch in what they’ve arranged without them actually checking it, and I think they are liking it in some ways because it means they bring more money in for it.”