Introduction

Navigating the regulatory landscape to obtain FCA authorisation for consumer credit lending is essential for any firm looking to provide lending services in the UK. Here is some key information to help guide you through the process.

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Understanding Limited and Full Permission

When applying for FCA authorisation as a lender, you'll need to determine whether your business requires Limited or Full Permission. Here’s a simple breakdown:

• Limited Permission: This is for firms carrying out specific credit-related activities with fewer regulatory requirements. For instance, if you’re a supplier providing interest-free credit or a local authority offering loans, you might only need Limited Permission.

• Full Permission: This is required for firms involved in more comprehensive credit activities, like charging interest on loans, debt collection, or providing credit information services.

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Common Misunderstandings about Limited Permission

It's crucial to apply for the correct type of permission. Common mistakes include applying for Limited Permission when you:

• Add interest or other charges to credit agreements.

• Are involved in debt collection or counselling as your main business.

• Provide credit information services not related to Limited Permission activities.

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Application Process

1. Preparing Your Application

The first step is to register on the FCA’s Connect system, where you will submit your application. Your application must include:

• Application Form: Complete with all required details about your business and operations.

• Regulatory Business Plan (RBP): This document explains your business model, target market, and how your products/services compare to competitors. It shows the FCA that you have a solid plan for operating responsibly.

• Financial Forecasts: Provide detailed financial projections. This helps the FCA assess your financial stability and your ability to sustain your business operations.

• Supporting Documents: These include your compliance policies, risk management frameworks, and any other relevant materials tailored to your firm’s activities. Each document should demonstrate how you plan to meet regulatory requirements.

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2. What the FCA Looks For

The FCA wants to see that you have robust systems and controls in place to manage your lending activities. Here’s what they typically check:

• Conduct Risk Framework: How you ensure your business treats customers fairly and manages risks.

• Technology and Cyber Security: Measures you take to protect customer data and ensure operational resilience.

• Credit Risk and Affordability: How you assess whether a customer can afford to repay their loan. This includes your policies on credit checks and affordability assessments.

• Complaints Handling: A system to handle customer complaints promptly and fairly.

• Financial Crime Prevention: Your measures to prevent money laundering and financial crimes.

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Avoiding Common Pitfalls

• Be Thorough: Provide complete and accurate information. Missing details or incomplete forms can delay your application.

• Choose the Right Permission: Ensure you understand whether you need Limited or Full Permission based on your activities.

• Regular Updates: Keep your compliance policies and procedures up to date to reflect any changes in regulations.

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FCA Threshold Conditions

The FCA’s threshold conditions are the minimum standards you must meet to gain and retain authorisation:

• Effective Supervision: Your firm must be structured in a way that allows the FCA to supervise it effectively.

• Appropriate Resources: Ensure you have adequate financial and non-financial resources to operate.

• Suitability: Those running the firm must have the appropriate skills, integrity, and reputation.

• Business Model: Your business model must be appropriate for conducting regulated activities and must be viable in the long term.

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Specific Requirements for Different Types of Lenders

Mainstream Consumer Credit Lenders

You’ll need to provide detailed information about:

• Your funding sources and any conditions tied to them.

• The types of lending products you offer, their features, and the terms and conditions.

• Your target market and how your products meet their needs.

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High-Cost Lenders

Include details on:

• Compliance with the FCA’s price cap and rules on continuous payment authorities (CPAs) and refinancing.

• Your approach to ensuring customers understand the costs and risks associated with high-cost loans.

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Other Specialised Lenders

For logbook loans, home collected credit, pawnbrokers, guarantor loans, motor finance, and retail finance providers, you need to demonstrate transparency, fairness, and compliance with specific regulations related to each type of lending.

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How Buckingham Capital Consulting Can Help

Expert Guidance

Buckingham Capital Consulting offers tailored support to help you navigate the FCA authorisation process. Our team of experts will guide you through every step, ensuring you understand and meet all regulatory requirements.

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Document Preparation

We assist in preparing all necessary documents, including your business plan, financial forecasts, and compliance policies. Our goal is to ensure your application is comprehensive and accurate, increasing your chances of approval.

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Compliance Framework Development

Our experts work with you to develop a robust compliance framework. This includes policies and procedures for risk management, customer complaints, financial crime prevention, and more.

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Ongoing Support

Compliance doesn’t end with authorisation. We provide ongoing support to help you maintain compliance with FCA regulations. This includes regular reviews, updates to policies and procedures, and training for your staff.

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Personalised Service

Every firm is unique. We tailor our services to your specific needs, ensuring you get the support that’s right for you. Our personalised approach means you can focus on running your business while we handle the complexities of regulatory compliance.

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Final Steps

After submitting your application, stay in touch with the FCA and be prepared to provide any additional information they request. Demonstrating a strong compliance framework and a commitment to meeting regulatory requirements will significantly improve your chances of obtaining authorisation.