Do I need full or limited permissions?

Firms carrying out consumer credit activities apply for one of two types of authorisation: limited permission or full permission. Which applies depends on the nature of the activities and whether credit is the main business or secondary to it. Applying under the wrong category can delay an application by up to six months, so the distinction is worth getting right before submission.

Any firm engaging in a regulated activity must be authorised or registered with the FCA. Undertaking a credit-related regulated activity in the UK without proper authorisation is a criminal offence. Broadly: if you are a lender, a broker, or involved in debt counselling, debt collection or debt administration, you are likely to need authorisation.

The FCA’s Perimeter Guidance (opens handbook.fca.org.uk in a new tab) sets out the permission types, and anyone applying needs a clear understanding of it.

Limited permission

Limited permission typically covers:

• Consumer credit lending where the primary business sells non-financial goods or services, with no interest or charges - except for hire purchase or conditional sale agreements
• Credit broking where the primary business sells non-financial goods or services and broking is a secondary activity
• Not-for-profit debt counselling
• Not-for-profit debt adjusting
• Not-for-profit credit information services
• Consumer hire

Full permission

Firms seeking full permission typically engage in:

• Consumer credit lending as the main business
• Credit broking as the main business, or where sales occur in the customer’s home
• Debt counselling
• Debt adjusting
• Debt collection
• Debt administration
• Peer-to-peer lending
• Providing credit reference agency services

What the two actually mean

Firms often assume limited means a simpler process and full means more extensive requirements. The limited permission application is typically shorter and less costly, but that does not mean fewer obligations. Firms should not assume they are exempt from parts of the regulatory framework.

Although the application may require fewer documents, a firm with limited permission still needs to be ready to demonstrate compliance with the regulatory framework within twelve months of approval.

For full permission, firms submit a business plan alongside detailed information about their activities, history, financials, systems, controls and approved persons.

What happens next

If your firm needs permission, review the information published on the FCA website (opens fca.org.uk in a new tab) and establish which category your activities fall into before preparing an application. Where finance is one part of a broader business, the boundary between the two categories is where most of the difficulty sits.