Why “limited” does not mean informal, automatic or risk-free and how the business model determines the answer.
The names can be misleading. Limited permission is not a trial version of FCA authorisation, and full permission is not simply the option for larger firms. The correct route follows from the regulated activities a business carries on and the circumstances in which it carries them on.
A small business can require full permission. A sizeable retailer may be eligible for limited permission. Turnover and headcount are not the deciding tests.
The practical distinction
| Question | Limited permission may fit | Full permission may be required |
| Role of finance | Finance supports the sale of the firm’s own non-financial goods or services. | Finding or arranging finance is itself a main business activity. |
| Typical relationship | The supplier makes a relevant introduction to a third-party finance provider. | The firm acts as a primary broker, lender or carries on other full-permission activities. |
| Scope | Only specified activities are carried on in circumstances that qualify for limited permission. | The activity or circumstances fall outside the limited-permission categories. |
| Application standard | Tailored, complete and operational information is still expected. | Tailored, complete and operational information is expected, often with wider requirements. |
A common limited-permission model
A retailer sells its own product and introduces the customer to a lender so the customer can pay over time. Most of the retailer’s revenue comes from selling the product, not from arranging finance. The introduction exists to support that sale. Subject to the full facts and any exclusions, this is the type of secondary credit-broking model that may be eligible for limited permission.
The same conclusion should not be copied across to every model. If a business sources finance as its main service introduces customers for transactions unrelated to its own goods or services, undertakes wider debt activities, lends on a broader basis or is a domestic-premises supplier, a different permission analysis may be needed.
Limited permission is not “light-touch approval”
The FCA applies its Threshold Conditions and authorisation expectations proportionately, but a limited-permission firm must still demonstrate that it is suitable and capable of operating compliantly. The application should show:
- a viable and understandable business model;
- appropriate people, governance and reporting lines;
- adequate financial and non-financial resources;
- a clear customer journey and appropriate controls;
- arrangements to identify and support vulnerable customers;
- a Consumer Duty approach focused on good customer outcomes; and
- final, tailored policies and processes that will be used day to day.
Four myths worth avoiding
“Limited permission is for small firms.” Not necessarily. The permission follows the activities and circumstances, not simply the size of the applicant.
“If the documents are complete, approval is guaranteed.” No. The FCA decides whether the applicant meets the relevant conditions and may ask further questions or refuse an application.
“A policy bundle is the application.” No. Policies are only part of the picture. The FCA also assesses the business model, people, resources, customer journey and the consistency of the evidence.
“We can start offering finance while the FCA assesses us.” Not merely because an application has been submitted. A lawful exemption or other basis would need to apply.
Cost and timing
The FCA currently places limited consumer credit permission in application-fee Category 2, which is £560. The fee is paid to the FCA, is non-refundable and can change, so it should be checked immediately before submission.
For FSMA applications, the FCA says it will usually assess a complete application within six months. An incomplete application may take up to 12 months. These are regulatory assessment periods, not a promise of approval by a particular date. They are separate from the time needed to prepare the application documents.
Choose the route before preparing the paperwork
The most efficient sequence is to analyse the activities first, identify the likely permissions second and prepare the application third. Starting with a generic policy bundle can lead to the wrong permissions, gaps in the customer journey or inconsistent answers on FCA Connect.
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.