Professional & Financial Services

FCA consumer credit authorisation

How to get FCA authorisation to offer consumer credit, including lending, credit broking, and debt collection. Covers application process, fees, responsible lending requirements, and high-cost credit rules.

UK-wide
Guide summary

You need FCA authorisation if your business lends money, arranges credit, collects debts, or offers buy now pay later services. Operating without approval is illegal. Apply through the FCA Connect portal and pay the required fees.

  • Check if you need full or limited permission based on your credit activities
  • Apply via FCA Connect portal with detailed policies and financial projections
  • Pay initial fees from £280 up to £11,150 depending on complexity
  • Follow responsible lending rules including affordability checks
  • Meet HCSTC price caps if offering payday loans
  • Display representative APR prominently in all credit promotions
  • Budget for annual FCA fees based on regulated income
  • Keep records of affordability assessments for all loans
  • Allow 110 days average for FCA to assess applications
  • Use clear risk warnings in all credit advertising
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UK-wide

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If your business offers credit to consumers, you need authorisation from the Financial Conduct Authority (FCA). This includes lending money, arranging credit, collecting debts, and offering buy now pay later services.

Operating without FCA authorisation is a criminal offence. Agreements made by unauthorised firms may be unenforceable.

Understanding FCA consumer credit authorisation

Do you need authorisation?

Yes, if you:

  • Lend money to consumers (personal loans, credit cards, hire purchase)
  • Arrange credit for consumers (credit broking, introductions)
  • Collect debts owed by consumers
  • Purchase consumer debts
  • Offer buy now pay later services
  • Provide consumer hire (rental) services

Exemptions exist for:

  • Credit where the customer pays no more than they would for cash (12-month interest-free, 12 or fewer payments)
  • Business-to-business lending only
  • Credit unions and some friendly societies

Types of consumer credit permissions

Full permission vs limited permission

Full PermissionLimited Permission
Higher-risk activitiesLower-risk activities
Lending, primary credit broking, debt collectionConsumer hire, secondary broking
More extensive applicationSimplified application
Higher feesLower fees

Application process

Preparing your application

  1. Business model: Clear description of your credit activities
  2. Governance: Directors, controllers, and compliance arrangements
  3. Policies: Responsible lending, complaints, vulnerable customers
  4. Financial resources: Projections showing viability
  5. Consumer Duty: How you'll deliver good customer outcomes

Tip: The most common cause of application delays is inadequate policies. Ensure your responsible lending policy is detailed and evidence-based.

Fees and costs

Budget for ongoing costs

  • Annual fees: Based on your income from regulated activities
  • FOS levy: Financial Ombudsman Service case fees
  • FSCS levy: Financial Services Compensation Scheme contributions
  • Compliance costs: Staff training, systems, reporting

High-cost short-term credit (HCSTC)

If you offer payday loans or similar high-cost credit, additional rules apply.

What counts as HCSTC? Credit where the APR is 100% or more and designed to be repaid (or substantially repaid) within 12 months.

The price cap means many HCSTC business models are no longer viable. Consider carefully before entering this market.

Responsible lending requirements

All consumer credit firms must assess affordability before lending.

What "affordability" means

You must assess whether the borrower can:

  • Make repayments as they fall due
  • Do so without significant adverse impact on their financial situation
  • Meet other financial commitments as well as the loan

This goes beyond credit scoring. A customer may have a good credit score but still not be able to afford a particular loan.

Financial promotions

Getting promotions right

  • Representative APR: If you quote any rate, you must show the representative APR
  • Social media: Each post must be standalone compliant - can't rely on links to small print
  • Triggered information: Certain claims require additional disclosures
  • Real-time approval: All promotions need pre-approval before use
Professional & Financial Services Requirement

Buy Now Pay Later under new regulation

Previously unregulated Buy Now Pay Later (BNPL) products are being brought into FCA regulation. If you offer BNPL:

  • Prepare for FCA authorisation requirements
  • Implement affordability assessments
  • Meet financial promotions rules
  • Register with FCA when regulations take effect

Check FCA guidance for current implementation timeline.

Next steps

  1. Confirm you need authorisation: Check if exemptions apply
  2. Determine permission type: Full or limited permission
  3. Prepare documentation: Business plan, policies, financial projections
  4. Apply via FCA Connect: Submit application and fee
  5. Respond to FCA queries: Promptly address any questions
  6. Implement systems: Ensure all systems ready before authorisation
  7. Maintain compliance: Ongoing reporting and regulatory requirements