FCA Consumer Credit Authorisation — UK
Expert advisory on FCA consumer credit authorisation. Lending, credit brokerage, debt collection and BNPL. Consumer Duty and CONC compliance.
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What is the FCA Consumer Credit Authorisation?
FCA consumer credit authorisation is required under the Financial Services and Markets Act 2000 for firms carrying on regulated consumer credit activities in the United Kingdom. These activities include consumer lending, credit brokerage, debt collection, debt counselling, debt adjustment and consumer hire.
The regulatory framework is governed by the FCA's Consumer Credit sourcebook (CONC), with the Consumer Credit Act 1974 remaining the primary underlying legislation. The FCA assumed responsibility for consumer credit regulation from the Office of Fair Trading in 2014 and has progressively increased the compliance burden — particularly around affordability assessments, Consumer Duty and fair treatment of customers in financial difficulty.
Firms carrying on consumer credit activities without FCA authorisation commit a criminal offence. Any credit agreement entered into by an unauthorised firm is unenforceable against the borrower.
Who Needs FCA Consumer Credit Authorisation?
Consumer credit authorisation is required by any firm whose business involves regulated credit activities, whether as a primary activity or ancillary to another business.
- —Consumer lenders (personal loans, instalment credit, revolving credit)
- —Credit brokers (introducing borrowers to lenders)
- —Debt collection firms
- —Debt counselling and debt adjustment firms
- —Credit reference and credit information agencies
- —Consumer hire firms
- —BNPL providers (once regulation commences)
- —Retailers offering instalment credit or point-of-sale finance
A common misconception is that firms offering "interest-free" credit or deferred payment terms are exempt from consumer credit regulation. In most cases, these arrangements still constitute regulated credit activities. Similarly, technology firms that facilitate lending through platforms — even where a separate entity is the lender of record — may require credit brokerage authorisation if they play any role in introducing borrowers to credit products.
Key Requirements
Permission Categories
Limited permission is available for firms where credit activity is ancillary to a primary business (e.g. retailers offering instalment credit). Full permission is required for firms where credit is a primary activity. Applying for limited permission when the firm's primary activity is credit triggers FCA challenge and requires restart as a full permission application.
Consumer Duty Framework
Consumer Duty applies in full to consumer credit firms. The price and value outcome requires firms to demonstrate that their credit products offer fair value. The FCA has specifically scrutinised consumer credit firms' Consumer Duty implementation in 2024–2025, with particular focus on the fair value assessment and outcomes monitoring framework.
Affordability Assessment (CONC 5.2A)
The FCA requires robust affordability assessment processes — income verification, expenditure assessment, credit history review and stress testing. CONC 5.2A is the specific rule. Dear CEO letters in 2023 and 2024 criticised inadequate affordability frameworks across the consumer credit sector. Affordability methodology must be documented, evidenced and proportionate to the credit risk.
Financial Promotions
Consumer credit firms are subject to stringent financial promotions rules under CONC 3. All financial promotions must be fair, clear and not misleading. A documented financial promotions approval process with appropriate sign-off is required. Representative APR must be displayed where applicable.
Complaints Handling
A complaints handling procedure compliant with DISP must be in place. Consumer credit firms must handle complaints promptly and fairly, report complaint volumes to the FCA and signpost the Financial Ombudsman Service.
Arrears and Financial Difficulty
CONC 7 requires firms to treat customers in financial difficulty with forbearance. Documented procedures for identifying financial difficulty, offering appropriate forbearance measures and managing arrears fairly must be in place at authorisation.
The Application Process
Permission Selection and Scope
Regulatory Counsel determines whether limited permission or full permission is required. We map all regulated credit activities the firm will carry on to the specific permission categories under FSMA. Incorrectly selecting limited permission when full permission is required wastes months. Timeline: 1–2 weeks.
Consumer Duty Framework Design
We develop the Consumer Duty framework — outcomes monitoring, product fair value assessment, fair treatment policy, vulnerability policy and the Consumer Duty board champion role. The FCA now expects Consumer Duty to be embedded in the application from day one, not treated as a post-authorisation exercise. Timeline: 3–4 weeks.
CONC Compliance Framework
We build CONC-compliant policies: affordability assessment methodology (CONC 5.2A), creditworthiness assessment procedure, financial promotions approval process, complaints handling procedure, and fair treatment in arrears policy (CONC 7). Each policy is evidenced with documented methodology, not just policy statements. Timeline: 4–6 weeks.
Regulatory Business Plan and Financial Projections
Full permission applications require a detailed business plan demonstrating how regulated activities will be conducted responsibly. Limited permission applications require a shorter form. Financial projections must demonstrate adequate capital to support the projected lending book and absorb expected credit losses. Timeline: 3–4 weeks.
FCA Connect Submission
We submit the completed application via FCA Connect. The FCA checks completeness and confirms receipt. Regulatory Counsel conducts final quality assurance before submission. Timeline: 1 week.
FCA Assessment
The FCA assesses the business plan, governance, affordability framework and Consumer Duty readiness. Full permission applications face more detailed scrutiny including possible management interviews. Regulatory Counsel manages all information requests and assessment correspondence. Timeline: 6–12 months.
Total expected timeline: 8–14 months from instruction to authorisation.
Why Applications Fail — and How We Prevent It
Inadequate Affordability Methodology
The most common challenge in FCA consumer credit assessments. CONC 5.2A requires a documented, evidenced affordability process — not just a policy statement describing what the firm will do. The FCA expects to see the specific methodology: how income is verified, how expenditure is assessed, how stress testing is applied and how affordability decisions are documented. Firms that describe intent without evidencing method face information requests extending the assessment by months.
Consumer Duty Framework Absent or Superficial
The FCA now expects Consumer Duty to be embedded in the application — not added as a post-authorisation exercise. Applications without a clear product fair value assessment, outcomes monitoring framework and evidence of Consumer Duty board-level oversight face substantive challenge. The 2024–2025 Dear CEO letters make clear this is a priority area.
Financial Promotions Framework Missing
Consumer credit firms are subject to some of the most stringent financial promotions rules in financial services under CONC 3. Applications without a documented financial promotions approval process — including sign-off procedures, representative APR calculation methodology and compliance with the Consumer Duty communications requirements — are rejected or heavily queried.
Limited vs Full Permission Confusion
Applying for limited permission when the firm's primary activity is consumer credit triggers FCA challenge. The FCA will require a full permission application and the entire process must restart, wasting 3–6 months. Correct permission selection at the outset is critical.
How Regulatory Counsel Can Help
End-to-End Application Management
We manage the complete consumer credit authorisation process — from permission selection through to FCA authorisation, including Consumer Duty framework, CONC compliance suite and all FCA correspondence.
Consumer Duty & CONC Compliance
We build fully embedded Consumer Duty frameworks and CONC-compliant affordability methodologies — the two areas most heavily scrutinised by the FCA in consumer credit applications.
Ongoing Compliance Support
Post-authorisation compliance support including Consumer Duty outcomes monitoring, CONC policy reviews, financial promotions approval and regulatory change management.
Regulatory Counsel has extensive experience in consumer credit authorisation — one of the FCA's most heavily supervised sectors. We understand the specific challenges around affordability methodology, Consumer Duty implementation and the distinction between limited and full permission. Our approach ensures applications are positioned for efficient FCA assessment.
Frequently Asked Questions
Limited permission is available where credit activity is secondary to a non-credit primary business — for example, a retailer offering instalment options. Full permission is required where credit is a primary business activity. Full permission carries higher governance, conduct and supervisory requirements and a more detailed FCA assessment process.
Yes. Consumer Duty has applied to consumer credit firms since July 2023. The FCA specifically scrutinises the price and value outcome — firms must demonstrate their credit products provide fair value. The FCA issued Dear CEO letters in 2023 and 2024 criticising inadequate Consumer Duty implementation in the consumer credit sector.
CONC 5.2A requires a creditworthiness assessment before lending — including income verification, expenditure assessment, existing credit obligations and stress testing. The FCA has challenged firms whose assessments rely solely on self-reported income without verification steps.
Application preparation takes 8–12 weeks with Regulatory Counsel. The FCA has a statutory 6-month assessment period from a complete application, extendable to 12 months in complex cases. Most consumer credit full permission applications are assessed within 9–12 months.
Yes. Credit brokerage is a regulated activity under FSMA 2000 and the Consumer Credit Act 1974. Any firm introducing customers to lenders, presenting credit options or facilitating credit agreements — even as an ancillary activity — requires FCA authorisation or limited permission. Operating without authorisation is a criminal offence.