A practical starting point for retailers and service businesses that introduce customers to finance, offer their own credit or hire goods.
A customer wants your product or service but would prefer to spread the cost. You introduce them to a lender, provide a link to a finance application or offer instalments yourself. It can feel like a small part of the sale. In regulatory terms, however, the detail matters.
FCA authorisation may be required where a business carries on a regulated consumer credit activity in the UK and no exemption or exclusion applies. The answer depends on what the business actually does, not simply the label it gives the service.
The question is about the activity, not the industry
Motor dealers, home-improvement firms, dentists, vets, retailers, jewellers and equipment suppliers can all encounter consumer credit regulation. But being in one of these sectors does not automatically mean that a firm needs the same permission as another firm in the same sector.
Start by mapping the customer journey. A regulated activity may arise if the business:
- introduces a customer to a lender or another credit broker with a view to a credit agreement;
- helps arrange finance or takes steps that go beyond a simple factual signpost;
- provides credit from its own funds or allows payment over time under a regulated agreement;
- leases or hires goods to individuals under arrangements that fall within consumer-hire regulation; or
- helps a customer settle existing finance as part of a new transaction.
The precise agreement, customer type, sales process and any applicable exemption must be considered. If the position is unclear, do not rely on a website description or a competitor’s permissions as a substitute for analysing your own model.
When limited permission may be relevant
The FCA describes a secondary credit broker as a business for which credit broking is not the main business. A typical example is a supplier that introduces customers to third-party finance so they can buy that supplier’s goods or services.
Limited permission may be available where the firm only carries on specified credit-related activities in the relevant circumstances. For example, the FCA says a supplier of goods or services is likely to need limited-permission secondary credit-broking permission when it introduces customers to third-party finance providers. Other limited-permission activities can include certain consumer-hire arrangements and narrowly limited debt-adjusting or debt-counselling activity connected with a transaction.
That is not a universal rule. Limited permission may not be available where credit broking is the firm’s main business, where the firm already has other permissions that make it a full-permission firm, or where the way the sale is carried out changes the regulatory position. Businesses selling in customers’ homes need particular care because domestic-premises activity can affect permission status.
Five facts to establish before you apply
1. Who is the customer?
Record whether customers are individuals, sole traders, small partnerships or companies. Consumer credit rules do not apply to every customer or every agreement in the same way.
2. Who provides the finance?
Identify every lender, broker or finance platform involved and the types of credit or hire agreements offered. If arrangements are still being negotiated, say so accurately rather than presenting them as final.
3. What does your team say and do?
Document the actual sales journey: advertising, explaining finance, collecting information, making introductions, submitting details, signing agreements and after-sales contact. The FCA will look beyond job titles and website wording.
4. How are you paid?
Identify customer fees, lender commission and any other financial benefit. Consider how these arrangements are disclosed and how conflicts are managed.
5. Where does the activity happen?
Record whether the customer journey takes place online, by telephone, on business premises or at the customer’s home. Location can affect the analysis.
Authorisation is more than an application form
A limited-permission application still needs to show that the business is ready, willing and organised. The FCA expects a tailored regulatory business plan, a clear end-to-end customer journey, information about lenders and agreements, an explanation of risks and controls, and evidence of how the firm will deliver good consumer outcomes.
Policies should describe the business that will operate in practice. Generic documents that conflict with the application, website or commercial arrangements can create questions and delay.
Do not start regulated activity simply because you have applied
Submitting an application does not itself give permission to trade. Unless an exemption or another lawful basis applies, a firm must not begin regulated activity while its application is being assessed. If launch timing matters, build the authorisation period into the commercial plan.
A sensible next step
Write down the proposed customer journey before choosing a package or permission. If the model appears suitable for limited permission, the next task is to prepare an application that is consistent from the FCA Connect form through to the business plan, policies, website and supporting evidence. If the position is uncertain, a written permission analysis may be the safer first step.
Important information
This content provides general information only. Whether authorisation is required, which permissions apply and what supporting material is needed depend on the firm’s actual activities and circumstances. It does not constitute legal or regulatory advice. FCA rules, forms, fees and expectations can change. Check the FCA’s current requirements before applying. FCA authorisation cannot be guaranteed.