Do I need FCA authorisation?

In almost all cases, yes. If your business offers credit, arranges it, or introduces customers to a lender, you are carrying on a regulated activity and need FCA authorisation. A small number of exemptions apply, and which permission you need depends on what the business actually does.

Do you need authorisation at all?

The main exemptions relevant to retailers and dealers are:

• Certain interest-free agreements. Fixed-sum credit repayable in a limited number of instalments over a short period, with no interest or charges, can fall outside regulation. The conditions are precise - see article 60F of the Regulated Activities Order (opens legislation.gov.uk in a new tab).
• Business-to-business lending. Credit provided to limited companies is generally outside the consumer credit regime, though the boundary is narrower than firms often assume once sole traders and small partnerships are involved.

Where the boundary falls in a specific case is a detailed question. The FCA’s Perimeter Guidance Manual (opens handbook.fca.org.uk in a new tab) is the authoritative source, and getting this wrong in either direction is expensive - carrying on a regulated activity without authorisation is a criminal offence.

For most retailers and automotive dealers offering finance to consumers, the answer is that authorisation is required.

Limited permission or full authorisation?

Step one: identify the credit activity

Start with what the business actually does. Common regulated consumer credit activities include credit broking, debt adjusting, debt counselling, debt collecting, lending, and consumer hire.

Step two: when limited permission is enough

Limited permission may be sufficient where:

• credit broking is a secondary activity - a retailer, car dealer or travel agent whose main business is selling something else
• you introduce customers to third-party lenders rather than lending yourself
• you do not offer debt management services such as adjusting repayment plans
• you do not carry on higher-risk activities such as debt collection or lending

Example. A car dealer referring customers to a finance provider will usually need limited permission only.

Step three: when full authorisation is required

Full authorisation applies where:

• you act as a lender or hire provider, offering credit directly
• you carry on higher-risk activities such as debt collection, debt counselling or debt adjusting
• credit broking is your primary business activity
• you handle client money in connection with credit activities

Example. A finance company offering personal loans directly needs full authorisation.

Step four: the factors that decide borderline cases

• Business model. Is consumer credit the primary activity or genuinely secondary to it?
• Customer base. Will the firm deal with customers in vulnerable circumstances?
• Risk profile. Does the activity attract enhanced FCA scrutiny?

Our guide on full versus limited permissions works through the distinction in more detail.

What authorisation commits you to

Authorisation carries ongoing obligations rather than a one-off approval. Annual fees are payable, the level depending on sector and income - the current figures are published in the FCA’s fee tables, and our guide on FCA application fees covers what to budget for.

Permissions do not expire, but they can be withdrawn where fees go unpaid or required returns are missed. That is covered in does FCA authorisation expire.