FCA Consumer Credit Authorisation: Limited and Full Permission, Fees, Rules and Timeline

Which consumer credit activities need FCA authorisation?

Each activity is a separate regulated activity in the Regulated Activities Order 2001. A firm applies for the exact activities it will carry on, and its permission lists them. Running an activity that is not on the permission is a breach, even for an authorised firm, so the scope should be mapped product by product before the application is drafted.

• - Entering into a regulated credit agreement as lender, and exercising the lender's rights and duties under it (article 60B). This covers personal loans, credit cards, overdrafts, motor finance, retail instalment credit and buy now pay later lending
• - Credit broking (article 36A): introducing customers to lenders or other brokers, or helping a customer enter a credit agreement
• - Operating an electronic system in relation to lending (article 36H): peer-to-peer lending platforms
• - Debt adjusting and debt counselling (articles 39D and 39E): negotiating with creditors for a customer, running debt management plans and giving debt advice
• - Debt collecting and debt administration (articles 39F and 39G): recovering debts and performing a lender's duties under an agreement on its behalf
• - Entering into a regulated consumer hire agreement as owner, and exercising the owner's rights under it (article 60N)
• - Providing credit information services (article 89A): helping customers check or correct their credit record
• - Providing credit references (article 89B): running a credit reference agency

Limited permission or full permission: which applies?

The FCA sets out the limited permission cases on its authorisation pages. If none of them fits, the firm applies for full permission. A firm that already holds FCA permission for other activities, such as insurance or mortgage broking, is a full permission firm for any credit activities it adds.

The commercial test is simple. If credit is a means of selling the firm's own goods or services, and no interest or charge is made to the customer, limited permission is usually available. If credit is itself the product, or the firm earns from it, full permission is required.

• - Limited permission: credit broking where broking is not the main business and is done to sell the firm's own goods or services, and the firm is not a domestic premises supplier (a supplier who sells to customers while in their home)
• - Limited permission: introducing customers to lenders only for consumer hire or hire purchase
• - Limited permission: lending by a supplier of goods or services where no interest or charge is payable and the agreement is not hire purchase or conditional sale, and lending by a local authority
• - Limited permission: consumer hire where the firm only exercises the owner's rights and duties
• - Full permission: any lending with interest or charges, lending that does not fund a supply of goods or services, debt collecting, debt administration, debt adjusting and counselling, credit references and peer-to-peer platforms
• - Full permission: credit broking where introducing customers to lenders or brokers is a main business activity, or where the sale takes place in the customer's home

Buy now pay later: the deferred payment credit regime from 15 July 2026

The FCA began regulating deferred payment credit, the legal name for interest-free buy now pay later, on 15 July 2026. The change was made by the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025, and the FCA's final rules are in policy statement PS26/1.

A deferred payment credit agreement is fixed-sum credit to buy goods or services, repaid in no more than 12 instalments within 12 months, with no interest or other charges. It is regulated where the lender is a different business from the merchant, or where the lender acts as the supplier under an arrangement with the merchant. Agreements entered into before 15 July 2026 remain exempt and can continue to be serviced.

From 15 July 2026 a lender entering into these agreements must hold consumer credit permission for lending, or a temporary permission. The temporary permissions regime is closed: notifications ran from 15 May 2026 to 1 July 2026. A firm in the regime must apply for full authorisation by the last application date, which the legislation sets as the day six months after 15 July 2026, so by mid-January 2027. A lender that did not register for the regime must be authorised before it enters into any new agreement. Entering into one without permission is a criminal offence.

• - Lenders apply the Consumer Duty and carry out a proportionate creditworthiness assessment under CONC 5.2A before lending
• - Customers receive clear information up front on payment dates, amounts and what happens if a payment is missed
• - Customers in financial difficulty must be offered support and, where appropriate, referred to free debt advice
• - Customers can take complaints to the Financial Ombudsman Service
• - Credit broking of deferred payment credit is excluded from regulation for every merchant, including domestic premises suppliers who sell in customers' homes. The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) (No. 2) Order 2025 removed the domestic premises exception from 3 December 2025. A merchant that only offers its customers a third-party BNPL product does not need permission for that reason alone
• - A merchant's own promotions of a third-party lender's deferred payment credit are financial promotions. Because the introductions exemption in article 15 of the Financial Promotion Order no longer covers them, an unauthorised merchant needs them approved by an FCA-authorised firm, usually the lender
• - The FCA application fee for a firm with a deferred payment credit temporary permission is reduced by an amount set out in FEES 3 Annex 1, reflecting the fee paid to enter the regime

The threshold conditions and how they apply to credit firms

The threshold conditions are the minimum standards every authorised firm must meet on the day of authorisation and at all times after. They are set out in Schedule 6 to FSMA and explained in COND 2 of the FCA Handbook. Where a firm's only regulated activities are the credit activities that qualify for limited permission, three of the conditions are lighter.

Consumer Duty and CONC: the conduct rules that apply from day one

The Consumer Duty (PRIN 2A) requires firms to deliver good outcomes for retail customers. It applied from 31 July 2023 to products open to sale and from 31 July 2024 to closed products. It is measured through four outcomes: products and services, price and value, consumer understanding and consumer support. At least once a year the board must review a report on customer outcomes and confirm whether the firm is meeting the Duty (PRIN 2A.8.4R).

CONC is the detailed rulebook for consumer credit. The FCA expects an applicant to show how each relevant chapter is built into its processes, not only that a policy exists.

• - CONC 3, financial promotions and communications with customers: promotions must be clear, fair and not misleading, and a representative APR (the standard annual cost of credit) is required in the cases CONC 3.5.7R sets out
• - CONC 4, pre-contractual requirements: adequate explanations and information before the customer signs
• - CONC 5.2A, creditworthiness assessment: assessing both credit risk to the lender and affordability for the customer, proportionate to each case, with reasonable steps to establish income
• - CONC 7, arrears, default and recovery: policies for customers in or approaching arrears, forbearance, and fair use of continuous payment authorities
• - CONC 8, debt advice: standards for debt counselling and debt adjusting firms
• - CONC 10, prudential rules for debt management firms
• - DISP, complaints handling: resolving complaints fairly and promptly, with access to the Financial Ombudsman Service

Senior managers and approved persons under SM&CR

The Senior Managers and Certification Regime (SM&CR) decides which individuals need FCA approval before they take up their role. Each candidate submits a Form A with the application. The FCA treats a failure to disclose relevant history on a Form A as possible evidence of dishonesty, so disclosures should be complete, including any removal from a lender or product provider panel.

A firm whose permission is limited to the credit activities that qualify for limited permission is a limited scope SMCR firm (SYSC 23 Annex 1 6.7R). It normally needs one approved senior manager, the limited scope function (SMF29). A full permission firm is a core SMCR firm. A firm becomes an enhanced SMCR firm if its annual revenue from regulated consumer credit lending reaches £130 million or more on a three-year rolling average.

• - SMF1 Chief Executive and SMF3 Executive Director: the people who run the business day to day
• - SMF9 Chair: the chair of the board
• - SMF16 Compliance Oversight: the person responsible for compliance, required depending on the firm's permissions
• - SMF17 Money Laundering Reporting Officer: required where the firm is subject to the FCA's money laundering systems rules, which applies to lenders
• - SMF27 Partner: applies to partnerships only
• - A standalone application to approve a new senior manager at an authorised firm must be decided within three months of receipt (section 61 FSMA)

Financial resources and capital

There is no single minimum capital figure for consumer credit authorisation. A limited permission firm must show it can meet its debts as they fall due. A full permission firm must show financial resources appropriate to its activities: for a lender, that means funding for the loan book, capacity to absorb expected credit losses, and forecasts that hold up under stress.

Two groups have specific prudential rules. Debt management firms must hold prudential resources of at least the higher of £5,000 or a tiered percentage of the debts they manage: 0.25 per cent of the first £5 million, 0.15 per cent of the next £95 million and 0.05 per cent above that (CONC 10.2). Peer-to-peer platforms are subject to a separate financial resources requirement in the FCA's prudential sourcebook.

For lenders, the FCA asks for details of funding, including any covenants or conditions that could drive poor customer outcomes. A funding line that rewards volume over affordability is a conduct question as well as a financial one.

What a strong application pack contains

Applications are submitted on the FCA's Connect system. The FCA does not review drafts: every document must be final and signed off. An application missing the minimum information is returned without assessment.

• - Application form and Form A for each senior manager, with full disclosures
• - Regulatory business plan specific to the firm: where it fits in the market, how its products compare, target customers, distribution and how each activity maps to the permissions sought
• - Financial forecasts prepared to the FCA's guidance, with funding sources and assumptions
• - For lenders: product features, loan sizes, volumes, interest rates and fees, and the funding terms
• - Creditworthiness policy showing how credit risk and affordability are assessed, how staff or systems make the decision, how ONS or open banking data is used, and how non-standard income such as self-employment is assessed
• - Financial difficulty, arrears and forbearance procedures, and how lending and arrears data will be monitored
• - Financial promotions approval process, complaints procedure and vulnerable customer policy
• - Consumer Duty framework: target market, fair value assessment, outcome measures and the board reporting cycle
• - For high-cost lenders, motor finance, retail finance, guarantor and logbook lending: the additional information the FCA lists for each sector
• - Governance map, compliance monitoring plan and, for lenders, financial crime controls

Financial crime controls for lenders

Lending, including consumer credit, is a listed activity under the Money Laundering Regulations 2017, so lenders apply customer due diligence, monitoring and suspicious activity reporting. The FCA's money laundering systems and controls rules in SYSC 6.3 apply to a credit firm only for the credit activities that also fall under those Regulations, and the MLRO appointment rules do not apply to a limited permission lender.

Brokers, debt collectors and other non-lending credit firms still need controls against fraud and other financial crime proportionate to their business. The FCA checks this under the appropriate resources and suitability threshold conditions.

The BNPL authorisation deadline: what to do before mid-January 2027

Firms that registered for the deferred payment credit temporary permissions regime can keep lending only until the last application date unless they apply. Article 12(3) of the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 sets that date as the day six months after 15 July 2026. The FCA has not published a separate calendar date, so firms should treat mid-January 2027 as the deadline and file well before it.

If a firm in the regime makes no application by that date, its temporary permission ends the next day (article 10(3)(f)). From then it cannot enter into new agreements. A firm that applies keeps its temporary permission until the FCA decides. If the application is refused or withdrawn, permission to enter into new agreements ends, and a supervised run-off lets the firm keep collecting existing agreements for up to two years or until all sums are recovered.

The FCA must decide a complete application within six months of receiving it (section 55V FSMA). A complete, firm-specific application filed early gives the most room before the deadline.