The trade body said the scheme cannot be applied uniformly as the FSA intends, because the different business models lenders operate could result in firms being “disproportionately” restricted or inhibited, regardless of the competency of the staff.

In addition, the CML believes the FSA has failed to take into account how regulation will change in light of its own Mortgage Market Review, which could significantly alter the definition of advised and non-advised sales.

The CML estimates that 14,500 lending staff will be affected by the FSA’s proposed Approved Persons scheme, with many unintentionally pulled under the scheme.

Spokesperson Bernard Clarke said: “In our view, the FSA needs to re-think its one-size-fits-all approach for lenders and intermediaries, and recognise the greater risks associated with the intermediary sector.

“Action on approved persons for intermediaries may be appropriate sooner rather than later. But we are not convinced there is a compelling case for intervention targeted at lenders, and now is not the time to make changes that do not help market recovery.”

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