If you are considering offering or arranging finance, it is likely that you will require a licence from the FCA. Examples of businesses that 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.
Step 1 – Your Business Plan
In your consumer credit licence application, the regulator will want to understand your business plan. You will therefore need to provide information across a number of areas. You must explain what your business does and why it requires the licence. 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:
Business and customers
- explanation of your business, its background and what it does
- business objectives, including business opportunities 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 need a limited or full permission consumer credit licence
Whether you require a full or a limited permission licence will depend on the type of regulated activity you intend to provide.
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)
Step 3 - Prepare all the required documents
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)
Step 4 – Submit your application
Applications are submitted using the FCA’s online system called Connect. In order to submit your application, you will be required to register online on Connect and upload your documents. Once you have done that, 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.
How Regulatory Counsel can help
We are one of the UK's leading regulatory consulting firms, helping companies with regulatory authorisations (licencing), compliance and consulting. Our focus and expertise have enabled us to work closely with regulators and understand the regulatory standards which are required from regulated firms.
Contact us by email at info@regulatorycounsel.co.uk or call us on 0203 6274 724.