There are two types of FCA authorisation. A consumer credit firm must choose whether to apply to the FCA for a “Full” or a “Limited” permission.
The type of authorisation that a firm should apply for is determined by the type of activities it carries out. The table below explains which activities fall into each category:
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Activities requiring a Limited Permission |
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Consumer hire (such as tool and car hire) |
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Credit broking (other than by a domestic premises supplier) where the sale of goods or non-financial services is the main business, and broking is a secondary activity designed to help finance the purchase of those goods or services (e.g. motor dealerships and high street retailers that introduce customers to a finance provider) |
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Credit broking in relation to consumer hire or Hire Purchase agreements |
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Lending where the sale of goods or non-financial services is the main business, and there is no interest or charges and the agreements are not Hire Purchase or Conditional Sale agreements (e.g. certain golf clubs or gyms allowing deferred payment for membership) |
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Consumer credit lending by local authorities (where lending is within the scope of the Consumer Credit Directive) |
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Not-for-profit bodies providing debt counselling and/or debt adjusting, including those who also provide credit information services |
| Activities requiring a Full Permission |
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Credit broking where introducing customers to lenders or brokersis a main business activity |
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Credit broking where the sale of goods or services takes place in the customer's home (such a supplier is known as a 'domestic premises supplier') |
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Debt administration and debt collection |
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Debt counselling and debt adjusting on a commercial basis |
| Lending which is not limited permission (such as lending in relation to personal loans, credit cards, overdrafts, pawnbroking, Hire Purchase or Conditional Sale arrangements) |
| Providing credit information services |
| Providing credit reference agency services |
| Operating an electronic system (peer-to-peer lending) |
Motor finance providers will require Full Permission from the FCA as consumer credit lending is deemed a higher-risk activity (i.e. there is a greater potential risk of consumer detriment). Firms applying for a Full Permission are required to comply with all of the FCA's consumer credit rules (see ‘The Financial Conduct Authority (FCA)' module), have greater FCA reporting requirements, higher annual authorisation fees and more stringent Threshold Conditions and Approved Person requirements.
Motor dealers can apply to the FCA for a Limited Permission for their consumer credit activities, as providing credit is secondary to their primary activity of selling cars. There are less onerous regulatory requirements for firms holding a Limited Permission. However, a motor dealer (or any other type for firm) cannot hold a Limited Permission for consumer credit if it is directly authorised with the FCA for general insurance. A dealer must either apply for a Full Permission for consumer credit (to maintain direct authorisation for general insurance) or the firm must act as an Appointed Representative (AR) for general insurance if it wishes to apply for a Limited Permission.