Consumer credit authorisation is required for any firm carrying on regulated credit activities in the UK, including lending, credit broking, debt collection, debt administration, debt counselling and credit reference services. In short: the firm applies through FCA Connect for limited or full permission, pays a fee of £560 to £11,260, and the FCA must decide a complete application within six months. This guide explains who needs consumer credit authorisation, what to file and how to keep to that timetable.
Who Needs Consumer Credit Authorisation?
The regulatory perimeter for consumer credit is defined by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (as amended). Regulated activities include: entering into a regulated credit agreement as lender; exercising or having the right to exercise the lender's rights and duties under a regulated credit agreement; credit broking (introducing borrowers to lenders, or introducing lenders to each other); debt adjusting, debt counselling, debt collecting and debt administration; operating an electronic system in relation to lending (peer-to-peer platforms); and providing credit references or credit information services.
Firms carrying on any of these activities by way of business in the UK must hold Part 4A permission from the FCA. There are limited exclusions, but these are narrowly drawn and should not be relied upon without careful analysis. Since 15 July 2026 lenders of deferred payment credit, the legal name for interest-free buy now pay later, also need lending permission. Lending or broking secured on the borrower's home is regulated mortgage business rather than consumer credit and needs FCA mortgage authorisation.
| Permission | Typical firms | FCA application fee |
|---|---|---|
| Limited permission | Retailers broking credit for their own goods, not-for-profit lenders, some hire firms | £560 (category 2) |
| Full permission, category 3 | Credit brokers as a main business, debt counselling | £1,130 |
| Full permission, category 5 | Mainstream lenders, motor and retail finance providers, debt collection, P2P platforms | £5,640 |
| Full permission, category 6 | High-cost short-term credit, debt management plans, credit reference agencies | £11,260 |
The Application Process
The FCA's consumer credit authorisation process follows the standard Part 4A framework but with sector-specific requirements. The key stages are:
Pre-application preparation: Before submitting the application, the firm should have: a clearly articulated business model; a detailed regulatory business plan; an adequate compliance framework (policies, procedures, systems and controls); appropriate financial resources; and fit and proper individuals to hold key roles. Application submission. The application is submitted through the FCA's Connect system and includes: the application form, regulatory business plan, compliance framework documentation, financial projections (typically 3 years), details of proposed personnel (including fitness and propriety assessments), and evidence of adequate financial resources.
FCA assessment. The FCA assesses the application against the threshold conditions for authorisation. Under section 55V of FSMA it must decide a complete application within six months of receipt, and an incomplete one within 12 months. For consumer credit firms, the FCA focuses particularly on: the adequacy of the firm's financial resources relative to the planned activities; the competence and experience of key personnel; the robustness of the compliance framework, including complaints handling, arrears management and forbearance procedures; the firm's approach to treating customers fairly and delivering good outcomes under the Consumer Duty; and the firm's understanding of the regulatory requirements applicable to its specific activities.
Decision. The FCA will either grant the application (with or without requirements), refuse it, or issue a warning notice indicating its intention to refuse. The firm has the right to make representations before a final refusal decision.
Key Application Requirements
Regulatory business plan. This is the single most important document in the application. It should clearly explain: what the firm does and how it generates revenue; the target customer base and distribution channels; the products or services offered (with worked examples of pricing, fees and total cost of credit); the organisational structure, governance arrangements and key personnel; the risk management framework; and the firm's approach to the Consumer Duty, including how it will monitor and evidence good customer outcomes.
Financial resources. The FCA requires firms to demonstrate that they have adequate financial resources to carry on the planned activities, meet regulatory capital requirements where applicable, and absorb losses during the start-up phase. Financial projections should cover at least three years and include realistic assumptions about revenue growth, operating costs and bad debt provisioning. The FCA will scrutinise projections that appear overly optimistic or that assume profitability within an unrealistically short timeframe.
Compliance framework. The firm must demonstrate that it has (or will have by the time it begins trading) adequate systems and controls for: creditworthiness assessments and affordability checks; responsible lending practices; arrears management and forbearance; complaints handling in accordance with the FCA's DISP rules; financial promotions compliance; data protection (UK GDPR); and ongoing Consumer Duty monitoring.
Common Reasons for Refusal
The FCA has identified recurring weaknesses in consumer credit applications. The most common reasons for refusal or withdrawal include: insufficient financial resources, the firm cannot demonstrate that it can sustain operations during the start-up phase or absorb potential losses; inadequate compliance expertise, key personnel lack the knowledge and experience to manage a consumer credit business in compliance with FCA requirements; poorly articulated business model, the FCA cannot understand how the firm will operate, who its customers are, or how it will manage the key risks; and failure to address the Consumer Duty, the firm cannot demonstrate how it will deliver good outcomes across the four Consumer Duty outcome areas (products and services, price and value, consumer understanding, and consumer support).
Consumer Duty From Day One
The Consumer Duty has applied since 31 July 2023 to all FCA-authorised firms dealing with retail customers, including newly authorised consumer credit firms. The FCA expects applicants to demonstrate, at the application stage, how they will: design products and services that meet the needs of the target market; ensure that pricing represents fair value for customers; communicate clearly and in a way that supports customer understanding; and provide adequate customer support, including during financial difficulty. Firms that treat the Consumer Duty as an afterthought rather than integrating it into their business model from the outset are unlikely to satisfy the FCA's authorisation standards.
Regulatory Counsel advises firms on FCA consumer credit authorisation applications, regulatory business planning and compliance framework design. Contact us for a written proposal. See our FCA authorisation page for more.
Frequently asked questions
Section 55V of FSMA requires the FCA to decide a complete application within six months of receipt, and any application within 12 months. A complete application with every role filled keeps to the six-month timetable.
The firm must show adequate resources to sustain operations and absorb losses, supported by realistic financial projections. Debt management firms must also hold at least the higher of £5,000 or a percentage of debts managed under CONC 10.
The regulatory business plan. It must clearly explain the business model, target customers, products, pricing, governance, risk management and Consumer Duty approach.
Yes. The FCA expects applicants to demonstrate compliance with the Consumer Duty from the application stage, not as a post-authorisation afterthought.
The FCA application fee is £560 for limited permission. Full permission costs £1,130, £5,640 or £11,260 depending on the activities. The fee is non-refundable and paid on submission.
Yes. Deferred payment credit has been regulated since 15 July 2026, so a firm entering into these agreements as lender needs consumer credit lending permission or a temporary permission.
Definitive guides on this topic
The permanent reference pages this article relates to.