Consumer credit authorisation: a guide

What consumer credit authorisation covers

The regulated consumer credit activities are set out in Parts 2 and 3A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, usually called the RAO. The 2013 amendment order inserted these activities so they took effect when regulation transferred to the FCA on 1 April 2014. If you carry on one of these activities by way of business in the United Kingdom, you generally need to be authorised.

The named activities include entering into a regulated credit agreement as lender and exercising the lender's rights and duties under it, which article 60B of the RAO defines as a specified activity. Alongside lending sit credit broking, operating an electronic system in relation to peer to peer lending, debt adjusting, debt counselling, debt collecting, debt administration, providing credit information services and providing credit references. Consumer hire, where a firm hires out goods under a regulated agreement, is also within scope.

A regulated credit agreement is broadly an agreement under which a lender provides credit to an individual or relevant borrower and which is not an exempt agreement. The RAO sets out categories of exempt agreement, so not every arrangement that looks like credit is regulated. Because the boundary can be subtle, the FCA directs firms to its Perimeter Guidance manual, known as PERG, to test whether a particular activity needs authorisation before assuming that it does or does not.

Understanding which activities apply to your business model matters because your permission is built from them. A firm is not authorised in general terms; it receives a scope of permission listing the specific regulated activities it may carry on. Tools such as Nasara Authorise are designed to help firms map their intended activities to the correct permissions before anything is submitted.

Limited permission and full permission compared

The FCA divides consumer credit firms into two authorisation types. Limited permission is a proportionate route for firms whose credit activity is lower risk or secondary to a wider business, and it carries a simpler application and lighter ongoing requirements. Full permission applies to every other consumer credit firm and brings the complete set of FCA consumer credit rules, higher fees and more detailed reporting.

Limited permission is available in defined situations rather than as a matter of choice. It covers credit broking carried on as a secondary activity by a firm whose main business is selling goods or non financial services, such as a car dealer or a retailer offering finance, along with consumer hire and the broking of hire or hire purchase agreements. It also covers debt counselling, debt adjusting and credit information services where these are carried on by a not for profit body, or as a secondary activity to lending, broking or hiring. Local authorities lending, and suppliers offering credit with no interest and no charges, also fall within the limited permission set.

Full permission is required whenever an activity sits outside those boundaries. That includes lending where interest or charges apply, credit broking as a firm's main business, debt collecting and debt administration, debt counselling or debt adjusting carried on commercially rather than as a secondary or not for profit activity, providing credit references, and operating a peer to peer lending platform. A firm that supplies goods or services in the customer's home, a domestic premises supplier, cannot use the secondary broking route and needs full permission.

The distinction is not merely administrative. A full permission firm must satisfy more demanding threshold conditions, evidence approved persons for key roles and comply with the full breadth of CONC, whereas a limited permission firm faces a proportionate version of these obligations. Choosing the wrong route, or assuming limited permission when full permission is required, is a common cause of delay and rework.

How the CONC rules shape your obligations

Authorisation is the entry point, but the ongoing standard for consumer credit firms is set by the Consumer Credit sourcebook, CONC, in the FCA Handbook. CONC translates the high level protections of the Consumer Credit Act 1974 and the FCA's Principles for Businesses into detailed conduct rules covering financial promotions, pre contract disclosure, responsible lending, arrears and default handling, and debt advice.

Responsible lending is a central theme. CONC requires firms to assess creditworthiness and affordability before lending or significantly increasing credit, so that a borrower can meet repayments without undue difficulty. Firms carrying on debt counselling or debt adjusting must meet the standards in CONC on debt advice, and all firms must ensure their financial promotions are clear, fair and not misleading.

Since July 2023 the Consumer Duty has sat alongside CONC, requiring firms to deliver good outcomes for retail customers across products, price and value, consumer understanding and consumer support. For a consumer credit firm this raises the bar on how products are designed, how they are explained and how customers in difficulty are treated. A firm preparing for authorisation should be able to show that its systems and controls already reflect these expectations.

Because the depth of CONC that applies is proportionate to the activities carried on, a limited permission broker will engage with fewer provisions than a high cost lender. Even so, every applicant should map the CONC obligations relevant to its permissions and evidence how it will meet them, since the regulator wants to see that a firm is ready, willing and organised to comply from day one rather than intending to build compliance later.

Working out whether you need authorisation

Not every business that touches credit needs to be authorised. Some activities are excluded, some agreements are exempt, and some firms operate lawfully as appointed representatives of a principal that holds the permission. The task is to test your specific facts against the RAO and the FCA's Perimeter Guidance before deciding.

The starting question is whether you carry on a regulated consumer credit activity by way of business in the United Kingdom. If you do, you then check whether an exclusion or an exemption removes the activity from the regulated perimeter. For example, certain agreements with no interest or charges, or credit offered in narrowly defined commercial circumstances, may fall within the RAO's exempt categories, though the conditions are precise and should not be assumed.

If your activity is regulated and no exclusion applies, you need permission, either by becoming authorised in your own right or by acting as an appointed representative of an authorised principal that accepts responsibility for your conduct. Operating without the correct permission is a serious matter, so this analysis should be documented rather than taken on trust.

This is also the point to confirm which permission type fits. Mapping each intended activity to limited or full permission, and to the correct pricing category, means you can budget accurately and avoid submitting an application the FCA later has to unwind. Documenting the rationale for each permission makes the application easier to assess and less likely to attract follow up questions.

The application process and what the FCA expects

Applications for consumer credit authorisation are submitted through Connect, the FCA's online system for applications and notifications. A limited permission application uses a shorter form than a full permission application, reflecting the lighter requirements, but both ask the firm to describe its business, its people and its controls.

The FCA expects a complete and coherent application. For a full permission firm this typically means a regulatory business plan covering the nature and scale of the activities, the customer journey, financial information and forecasts, key risks and mitigations, governance arrangements, and core compliance documentation such as a compliance monitoring programme. Full permission lenders are also expected to detail their credit risk and affordability assessment approach. Limited permission applications are less demanding but still require honest, complete information.

The regulator assesses whether the firm meets, and will continue to meet, the threshold conditions in the Financial Services and Markets Act 2000, and whether the individuals responsible are fit and proper. The FCA usually assesses a complete application within six months of receiving it, and an incomplete application can take up to twelve months, so completeness at the point of submission has a direct effect on timing.

Preparation is therefore worth more than speed. Firms that submit final, signed off documents that tell one consistent story tend to face fewer follow up questions and shorter assessments than those that submit drafts and fill gaps under time pressure. Once authorised, the firm is added to the Financial Services Register, the public record that consumers and counterparties can check.

Consumer credit authorisation fees

The FCA charges a one off application fee that is paid through Connect when you submit, by credit or debit card, and it is non refundable. The amount depends on the pricing category that matches the permissions you are seeking, and consumer credit firms are grouped into specific categories depending on whether they need limited or full permission and how complex their activities are.

A limited permission consumer credit application falls into pricing category 2, which the FCA currently publishes as a fee of five hundred and sixty pounds. Full permission applications sit in a higher category, category 3, 5 or 6, depending on the activities involved, so the cost rises with the risk and complexity of the business. The published fees are one thousand one hundred and thirty pounds for category 3, five thousand six hundred and forty pounds for category 5 and eleven thousand two hundred and sixty pounds for category 6.

These are application fees only. Once authorised, firms also pay periodic fees each year, which the FCA sets through its annual fees policy statements and which vary with the firm's permissions and the size of its regulated business. A limited permission firm generally pays a lower periodic fee than a full permission firm, reflecting the proportionate nature of the regime.

Because the fee is non refundable even if an application is withdrawn or refused, scoping your permissions accurately at the outset matters financially as well as procedurally. The FCA does refund the application fee in the narrow case where it rejects a submission without assessing it because the minimum information was not provided, but firms should not rely on that. Always check the current figures on the FCA fees pages before you budget, as the amounts are reviewed periodically.

Conclusion

Consumer credit authorisation rewards firms that start with a careful analysis rather than a form. The first task is to identify which regulated activities you carry on, test them against the RAO and the FCA Perimeter Guidance, and then decide whether your business fits the proportionate limited permission route or requires full permission. That decision drives the application form you use, the depth of CONC that applies to you, and the fee you pay.

From there, a complete and coherent application submitted through Connect, backed by evidence that you are ready, willing and organised to comply with CONC and the Consumer Duty, gives you the best chance of a smooth assessment inside the six month statutory window. This article is educational information and not regulated advice, so use it to frame your preparation and seek professional support suited to your firm where the perimeter, your permissions or your obligations are unclear.

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