Offer finance or lend directly to your customers
Consumer Credit Licence
FCA, United Kingdom
If you are considering offering or arranging finance, it is likely that you will require a consumer credit licence from the FCA. Examples of businesses who need a consumer credit licence include credit brokers (where you refer finance applications to lenders), lenders, pawnbrokers, high-cost short-term (payday) and debt-related activities, such as debt collection and counselling.
Depending on your business activity, you will require either full permission or a limited permissions consumer credit licence.
Below, you will find the essential information about obtaining a consumer credit licence from the Financial Conduct Authority.
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Motor traders and dealers
It is important to establish whether you will require a full or a limited permission licence. This will depend on your business activity.
If your main business activity is selling motor vehicles and wishes to offer finance to your customers, for example, referring customers who wish to purchase your vehicle on finance to lenders, you will require a limited permission consumer credit licence.
If, however, you do not sell any vehicles but wish to refer motor finance queries to lenders, you will require a full permission consumer credit licence.
Heating and boiler product sellers and installers
If you sell boiler and heating product that involves the sale or service taking place in the customer’s home e.g. boiler installation, you will require a full permission consumer credit licence if you wish to offer finance options to your customers.
Physical and online retailers
If you are a retailer and your primary business involves the sale of goods or services, such as clothing, electric goods, and furniture, and you wish to offer finance options to your customers, you will require a limited permission licence.
If you wish to provide debt-related services, such as debt counselling and debt collection, you will require a full permission consumer credit licence.
Limited Permission Consumer Credit Licence
Applying for limited permission involves a shorter application process and a lower application fee in comparison to full permission. If you intend to provide any of the following activities, you will require a limited permission licence:
- consumer hire (such as tool and car hire)
- credit broking (excluding domestic premises suppliers) where the sale of goods or non-financial services is the main business and broking is a secondary activity designed to help finance the purchase of those goods or services (for example, car dealerships and retailers that introduce customers to a lender)
- credit broking in relation to consumer hire or hire purchase agreements
- lending where the sale of goods or non-financial services is the main business, and there is no interest or charges
- consumer credit lending by local authorities
- not-for-profit bodies providing debt counselling
Full Permission Consumer Credit Licence
If you intend to provide any of the following activities, you will require full permission:
- credit broking where you introduce customers to lenders or brokers and this is your main business activity.
- credit broking where the sale of goods or services takes place in the customer's home (such as boiler installation))
- debt administration and debt collection
- commercial debt counselling and debt adjusting
- lending which is not limited permission (such as lending in relation to personal loans, credit cards and pawnbroking)
- providing credit information services
- providing credit references (such as Experian)
- operating an electronic system (p2p lending)
Key information to prepare as part of the consumer credit licence
As part of your application, you will need to prepare and provide specific information with your application. You will need to provide the following information with your application:
- company business details
- future plans and details of your business activities
- financial forecasts and details
- details of what your business does
- details of how you will treat customers fairly
- your systems and controls
- your compliance arrangements including compliance monitoring
- details of your approved persons and controllers (shareholders)
Timeframe to obtain the consumer credit licence
- limited permission licence: 2-3 months
- full permission licence: 3-4 months
Consumer credit application fees
The application fee will depend on two things. First, whether you are applying for the limited or full permission licence, and secondly, your projected consumer credit income.