Knowledge Centre

Consumer Credit - Consumer credit license application

A number of financial service activities will require you to first obtain a consumer credit licence. In order to do so, you must prepare and submit a consumer credit license application.

When preparing a consumer credit license application, planning is key. It is important that you match the financial service you intend to provide with the FCA’s list of regulated activities.

In order to prepare a successful consumer credit license application, you must establish whether the service you wish to provide will require a limited permission or a full permission. Regulated activities that only need a limited permission include, consumer hire, credit brokering (where this is not the main business activity), lending (where the sale of goods is the main business activity and you do not charge interest or other charges), consumer credit lending by local authorities and not-for-profit firms. Regulated activities that require a full permission consumer credit license include credit broking (where this is the main activity), debt administration, debt counselling, lending, providing credit information and reference services and operating an electronic system, such as peer to peer lending.

Another important thing you must do before making an FCA application is to ensure you meet the FCA’s threshold conditions. Threshold conditions are basic requirements you must have in place. For example, you will need to ensure that your ‘mind and management’, in other words, people such as directors, must be located in the UK. You will need to demonstrate through your application that you have appropriate resources to operate your business. This includes having sufficient financial, management, staff, and systems to manage your business. Your team should be suitable and competent for their roles.

As part of your consumer credit license application, you will be required to prepare a business plan. The business plan must be detailed and include details of your existing business, business opportunity, your customers, the services you wish to provide (both regulated and non-regulated), the experience of your senior management team, your long term strategy, your fee disclosure to customers and the manner in which you will promote and communicate your services. Depending on the consumer credit permission you provide you will also need to address a number of specific questions within your business plan.

You will be required to complete an IT self-assessment questionnaire to discover whether a detailed assessment of your IT measures is required.