Do home improvement companies need an FCA licence to offer finance?

The short answer

Yes. If your business arranges finance for customers, or simply introduces them to a lender, you must be authorised by the Financial Conduct Authority (FCA) — or operate under someone else's authorisation as an "appointed representative." That's true even though a separate finance company does the actual lending. The only home-improvement firms that fall outside it are those that sell strictly for cash and never discuss, arrange, or refer finance at all.

You'll often hear this called a "consumer credit licence." Strictly there's no licence any more — what you need today is FCA authorisation (also called "permission") — but the everyday term is fine, and we use it too. For the full picture across all industries, see our step-by-step guide to getting an FCA consumer credit licence. This article focuses on what it means for home-improvement companies.

Why offering finance makes your business "regulated"

Here's the part that catches a lot of installers out: you don't have to lend any of your own money to be regulated. When you help a customer spread the cost of a new kitchen, windows, a conservatory or solar panels, you're almost always introducing them to a finance provider that does the lending. That act of introducing customers to a lender is called credit broking, and credit broking is itself a regulated activity under FCA rules.

It makes no difference if the finance is interest-free to the customer. In most "buy now, pay later" or "0% finance" deals in this trade, the installer subsidises the interest — but you're still introducing the customer to a lender, so you still need authorisation.

The in-home selling twist you must know about

There's a rule specific to your trade that's easy to miss. If you offer to sell your goods or services during a visit to a customer's home — which is exactly how most kitchens, windows, conservatories and solar are sold — the FCA treats you as a "domestic premises supplier." A quote given in the customer's living room is enough to count.

Why it matters: the lighter-touch introducer appointed representative (IAR) route that some businesses use is generally not available to domestic premises suppliers. In practice that means in-home sellers usually need their own credit broking authorisation (or full appointed-representative status under a principal) rather than the simplest introducer arrangement. So if you sell in customers' homes, don't assume a casual "introducer" set-up will cover you — it most likely won't.

Which permission do home-improvement firms need?

FCA authorisation comes in two tiers — limited permission and full permission — and for most installers the answer is limited permission.

The reasoning is straightforward. Your main business is supplying and installing improvements; finance is something you offer to help customers buy them. Because the credit broking is secondary to your main trade, the FCA treats you as a "supplier," and suppliers can apply for the lighter, cheaper limited permission tier. The permission you need is limited permission credit broking.

When a firm needs full permission instead

You'd move into full permission territory only if finance became a core activity in its own right — for example if arranging finance became a main part of what you do, if you brokered finance unconnected to your own work, or if you lent your own money so customers repaid you directly. Full permission carries heavier requirements, higher fees, and closer FCA scrutiny.

The appointed representative route — with a caveat

You can offer finance under someone else's authorisation by becoming an appointed representative (AR) of an already-authorised firm — usually a finance provider or compliance network acting as your "principal." The principal takes legal responsibility for your compliance and the FCA deals with them rather than you. But remember the in-home selling point above: because you're likely a domestic premises supplier, the lightest "introducer" version of this route is generally closed to you, so the realistic choice is usually full AR status under a principal or your own direct authorisation.

The trade-offs are the familiar ones. As an AR you operate under someone else's permissions and rules, you're usually tied to their lender panel, you'll often pay an ongoing fee, and the principal can set conditions or end the arrangement. Direct authorisation means you hold your own permission on the FCA register, you choose which lenders to work with, you pay no network fee, and you're not dependent on anyone else to keep you on — in exchange for carrying your own compliance responsibilities.

Direct authorisation or AR — which is right for you?

It depends on how you want to run the business. AR status can suit a very small or brand-new firm happy to work within one principal's panel with minimal regulatory involvement. Direct limited permission tends to suit installers who want independence: their own authorisation, freedom to work with any lender, no ongoing network fee, and full control of their finance proposition. Many firms start as an AR and move to direct authorisation as they grow. If you'd rather own your authorisation than rent it, direct limited permission is the route — and it's more achievable than most installers expect.

What else you'll need to get right

Authorisation is the gateway, not the whole job. However you're authorised, you'll need to follow the FCA's consumer credit rules (its "CONC" sourcebook), advertise finance fairly under the financial promotions rules, check that customers can afford the repayments, disclose any commission clearly, handle complaints properly, and meet the FCA's Consumer Duty — the requirement to deliver good outcomes for customers, including those who are vulnerable. Because you often sell in the customer's home, you'll also need to respect cancellation rights that apply to in-home sales. These are ongoing obligations, and they apply proportionately to a small limited permission firm.

What you need to apply

For a direct limited permission application, you'll typically prepare a regulatory business plan, your compliance arrangements, a set of key policies (financial promotions, complaints handling, treating vulnerable customers fairly, and anti-money laundering), basic financial information, and details of an approved person the FCA will assess as "fit and proper." The application is submitted through the FCA's online portal, Connect. We walk through the full document list and the process in our guide to getting authorised. If you'd rather have it prepared for you, our fixed-price service for home-improvement firms does exactly that.

What it costs and how long it takes

There are two separate costs to budget for:

• The FCA's application fee — currently around £550 for a limited permission credit broking firm, paid directly to the FCA. The FCA sets and occasionally changes its fees, so check the current figure on its website.
• Preparing the application — you can do it yourself, pay a compliance consultancy (often £2,000 or more), or use a fixed-price service. This is where the cost varies most.

There's also a small annual fee to the FCA once you're authorised. On timing, six months is the FCA's statutory limit for deciding a complete application — and longer if it's incomplete. In practice, complete limited permission applications are often decided more quickly, though that's typical rather than guaranteed. The single biggest factor in avoiding delay is submitting a complete, well-prepared application the first time.

What happens if you offer finance without authorisation

This isn't a grey area worth gambling on. Arranging or introducing finance without being authorised — and without operating as an appointed representative — is a criminal offence. It can also make your credit agreements unenforceable, which creates real problems if you ever need to rely on them, and it exposes the business to FCA enforcement and reputational damage. If there's any doubt about whether you need authorisation, confirm your position before you start offering finance.