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Consumer Credit Firms: Applying For FCA Authorisation

15th June 2016

Regulated Consumer Credit Activities:

Firms that would like to offer consumer credit will need to apply for authorisation from the Financial Conduct Authority (FCA).

Dependent upon the consumer credit related activities you wish to undertake, this will invariably require either a limited or full permission application to be submitted to the FCA along with the required FCA application fee.

Before making an application, you will need to determine if any of the activities you wish to undertake are regulated. And if they are, then permission must be sought using the appropriate consumer credit application and submitted for the FCA Authorisation process. Completing the wrong application or applying for the wrong permissions can significantly delay your application with the FCA.

Consumer Credit Applications:

In the majority of instances, Consumer Credit applications are completed and submitted to the regulator using the FCA’s online Connect system for applications and notifications.

We have outlined a high level summary of limited permission and full permission activities below. However, if you are unsure of the specific permissions required for your proposed business activities or would like assistance in completing and submitting an application via the FCA Connect system, please contact our regulatory specialists, who will be happy to assist.

 >> See also FCA Application Support & Assistance Services <<

Limited Permission Consumer Credit Activities:

The following consumer credit activities are all regulated activities that require Limited Permission from the UK Regulator in order to undertake. Thus, in these instances, an application for Limited Permission should be submitted to the FCA.

• Credit Broking (other than by domestic premises supplier)

• Where the sale of goods or non-financial services is the main business and broking is a secondary activity to help finance the purchase of those goods/services(e.g. certain high street retailers and motor dealerships which introduce customers to a finance provider); or
• In relation to the Green Deal; or
• In relation to consumer hire or purchase agreements

• Consumer Hire (e.g. car and tool hire firms)
• Lending

• where the sale of goods or non-financial services is the main business, and there is no interest or charges and the agreements are not hire-purchase or conditional sale agreements (e.g. some golf clubs or gyms allow deferred payment for membership)

• Consumer Credit Lending by Local Authorities

• where lending is within the scope of the Consumer Credit Directive

• Not-for-profit Bodies providing debt counselling

• including those who also provide debt adjusting or credit information services)

• Limited Permission Activities (other than not-for profit bodies and for credit information services)

• that do not cover activities relating to agreements secured by legal mortgages on land

Full Permission Consumer Credit Activities:

If however, you plan on undertaking any of the following activities, then you will need to apply for Full Permission when submitting your Consumer Credit Application to the FCA.

• Peer-to-Peer lending (P2P)
• Credit Broking
• Debt Collection & Debt Administration
• Debt Counselling and debt adjusting on a commercial basis
• Lending

• That is not Limited Permission (e.g. personal loans, hire-purchase or conditional sale agreements, credit cards, overdrafts and pawnbroking)

• Providing credit information services
• Providing credit reference agency services

Summary Limited Permission vs Full Permission:

The two categories of authorisation for consumer credit businesses will be treated proportionately differently by the regulator:

Consumer credit firms with full permission will be subjected to a greater number of checks and have to meet more conditions when making their FCA applications. Once authorised, this will continue to be the case.

However, Consumer Credit firms with limited permission should present less risk to their customers. Thus these firms will have a proportionately reduced regulatory regime applied to them which includes having a shorter application process as well as lower application and annual fees than full permission. Once authorised they will also have reduced reporting requirements in comparison to those with full permission.

Consumer Credit and Financial Services Activities (non-consumer credit)

If you are looking to undertake both consumer credit activities and financial services activities (that are non-consumer credit), then a different application will have to be completed for the FCA.

In these instances, both an Application for financial services and a supplementary Consumer credit application form will have to be completed and submitted.

Help with Consumer Credit FCA Applications:

If would like assistance in completing and submitting an application via the FCA Connect system, please contact our regulatory specialists, who will be happy to assist.

Related Reading:

• FCA Application Support & Assistance Services
• Authorisation Delays: FCA Applications Backlog

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.

The FCA on Consumer Credit Applications:

“A firm or business that wants to carry on regulated consumer credit activities will have to apply for authorisation.”

FCA ,June 2016