In this article, we assess how to obtain an FCA consumer credit license.
If you are considering offering or arranging finance, it is likely that you will require a consumer credit license from the financial regulator - Financial Conduct Authority. Examples of businesses who require a consumer credit license include credit brokers (where they refer finance applications to lenders), lenders, pawnbrokers, high-cost short-term (payday) and debt-related activities, such as debt collection and counselling.
Step 1. Your Business Plan
In your consumer credit license application, the regulator will want to understand your business plan. You will, therefore, need to provide information across a number of areas for your consumer credit license application. You must explain what your business does and why it requires the consumer credit license. You must provide details of your customers, how you will source new customers, including your marketing methods. You will need to provide details of your business experience as well as the experience of your team and management, including their background and experience.
In summary, you will be required to provide the following information in your consumer credit license application:
Business and customers
- explanation of your business, its background and what it does
- business objectives, including business opportunity and aims
- your customers and marketing strategy
People and compliance
- details of your key people, their experience and background
- how you will monitor compliance
- details of risks you have identified and how you will manage them
Step 2. Decide whether you require a limited or full permission consumer credit license
Whether you require a full or a limited permission consumer credit license will depend on the type of regulated activity you intend to provide.
Limited permission consumer credit license
Applying for a limited permission consumer credit license involves a shorter application process and a lower application fee in comparison to the full permission consumer credit license. If you intend to provide any of the following activities, you will require a limited permission consumer credit license:
- 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 license
If you intend to provide any of the following activities, you will require a full permission consumer credit license:
- 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)
Step 3. Prepare all the required documents
As part of your FCA consumer credit license 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)
Step 4. Submit your application
You will be required to submit your completed application through the FCA’s online system, called Connect. In order to submit your consumer credit license application, you will first need to register online on Connect and upload your documents. Once you have done so, you will be required to pay the application fee and can then submit your application. After you have submitted your application you will receive an email from the FCA confirming the submission of your application.
Buckingham Capital Consulting is a leading international consulting firm, specialising in payment services, electronic money, banking and investment services. We are able to advise you on the best course of action and strategy based upon your business plan and financial product or service. We can help you with licencing, compliance, operational setup and related services, including, obtaining banking facilities. For more information, visit our website on www.buckinghamcapitalconsulting.com