What is a money lending licence?

A money lending licence is authorisation from the Financial Conduct Authority to lend money as a business. It gives legal permission to lend, set repayment terms and charge interest. In the UK all applications for lending permissions go through the FCA, and lending without the right permissions risks penalties, reputational damage and being barred from offering financial services.

If you are considering lending money as a business, you cannot simply start trading.

Why the licence exists

The purpose is straightforward: protect customers and ensure fair lending practices. The regime is designed to prevent predatory behaviour and to ensure that only businesses meeting the required standards operate in the lending market.

An FCA licence is not paperwork for its own sake. It is evidence that your business operates legally, ethically and in line with regulatory expectations - which matters to the customers and commercial partners who check.

Who needs one

You will likely need lending permissions if your business:

• Offers personal loans or short-term credit
• Provides hire purchase agreements
• Issues payday loans or other consumer credit products

The activities requiring authorisation are set out in the FCA’s Perimeter Guidance (opens handbook.fca.org.uk in a new tab), with the conduct rules for consumer credit firms in CONC (opens handbook.fca.org.uk in a new tab). Undertaking a credit-related regulated activity in the UK without the proper authorisation is a criminal offence.

If you are not sure

The boundary is not always obvious, particularly where lending is secondary to another business or where a third party is involved in the arrangement. Establishing which side of the perimeter you sit on is considerably cheaper before you start lending than after.