FCA Consumer Credit

If you want to provide regulated consumer credit activities to consumers, you will need to be authorised by the FCA before you can commence these activities.

Regulated Consumer credit activities include: 

• Lending money to customers
• Debt-related activities (i.e., offering debt advice to customers and helping them to manage their debt)
• Credit broking (i.e., helping customers to obtain a loan from a lender)
• Consumer hire (such as a tool or car hire)
• Issuing credit cards
• Selling goods or services on credit
• Providing credit information services (such as accessing or seeking to amend a customer’s credit file). 

The reference to consumers is relatively broad and includes:

• private individuals
• sole traders
• a partnership consisting of two or three individuals 
• an unincorporated body such as a sports or social club.

Key Considerations

• Do I need limited or full permissions?  

You will need to decide whether you wish to apply for limited permissions or full permissions.  As a general rule, if you are looking to offer or help customers to obtain finance to support your main business of selling goods or services, then you will need to apply for limited permissions.  Typical examples include car dealerships who introduce customers seeking to buy a car on finance to a lender.  If you are looking to provide regulated consumer credit services as a key or main part of your business, you will need to obtain full permissions.  Typical examples include acting as a debt management company, a credit broker or a lender. 

A limited permissions FCA application is shorter, whereas a full permissions application is more complicated and requires you to provide more information to the FCA.  For further information on the difference between these two types of permissions please see our blog: “Limited or Full Permissions - FCA Consumer Credit Application “.

• FCA Threshold conditions 

To become authorised you will have to show that you can meet the FCA’s minimum standards known as ‘threshold conditions’.   This means having suitable senior management and appropriate resources to manage your business.  Please see our blog: "FCA Threshold conditions" for further information.

• Business Plan 

This is a key critical document.  It sets out your business aims and objectives and should explain how you will organise your resources to run your business in a compliant manner.  The level of detail that your plan needs to go into should be proportionate to the complexity and scale of your business. Your business plan will help the FCA to assess the adequacy of your resources and the suitability of your business model. 

• Approved Persons

As part of a FCA application, you will be required to identify and submit an application for one or more Approved Persons who are employed by the firm.  An Approved Person is an individual who is directly authorised by the FCA to conduct certain activities which the FCA refers to as “controlled functions”.  This individual is directly responsible to the FCA for those activities.  For further information see our blog: “What is a FCA Approved Person?”

• FCA fees

You will need to pay an application fee, which depends on what activities you intend to carry out and how much income you will generate.  You will also need to pay an ongoing annual fee to the FCA after you are authorised.  This includes fees on behalf of other regulatory bodies such as the Financial Ombudsman Service, which handles customer complaints.  To gain an idea of the ongoing fees you are likely to pay, you can use the FCA’s fee calculator.

How we can help you 

• We have already helped Motor Dealers, Credit Brokers and Lenders with their  FCA authorisation application.

• We have an experienced team who understands the regulatory risks relating to FCA consumer credit applications and will help you to avoid the common pitfalls.  

• We also provide a fixed fee review service for an application which you may have prepared yourself.  We can check your application before you submit it to the FCA.

• We can help you with your ongoing compliance queries as a FCA regulated business such as supporting you with affordability assessments, arrears management, complaints handling, vulnerable customers management etc.