Do retailers need an FCA licence to offer finance?

The short answer: it depends what finance you offer

Offering finance can bring your shop under Financial Conduct Authority (FCA) regulation — but not always, and 2026 has changed the picture. The simple version:

• If you offer traditional retail finance — interest-bearing credit, or interest-free instalments spread over more than 12 months through a finance provider — you almost certainly need FCA authorisation (or to operate as an "appointed representative").
• If your only finance option is the newer regulated buy now, pay later (BNPL) at checkout, a merchant exemption usually means you don't need authorisation — with two important exceptions covered below.

You'll often hear authorisation called a "consumer credit licence." Strictly there's no licence any more — what you need is FCA authorisation (also called "permission") — but the everyday term is fine. For the full picture across all industries, see our step-by-step guide to getting an FCA consumer credit licence.

Why offering finance usually makes you "regulated"

Here's the principle: you don't have to lend any of your own money to be regulated. When you help a customer spread the cost — furniture, jewellery, electronics, a bike or a musical instrument — 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 a regulated activity. It makes no difference that the finance house carries the lending risk; it's your introduction that brings you within the regime, and it's regulated even where the credit is interest-free to the customer.

The buy now, pay later exception (new for 2026)

From 15 July 2026, BNPL — technically "deferred payment credit," meaning interest-free credit repaid in 12 or fewer instalments within 12 months — becomes a regulated product. Crucially, though, the new rules regulate the BNPL lenders, not the shops. The government has confirmed that merchants who simply offer BNPL at checkout are exempt from needing credit broking authorisation, so the established checkout experience can continue without tens of thousands of retailers having to get authorised.

Two exceptions matter, and they catch a lot of retailers out:

• Other regulated credit. The exemption only covers that specific short-term, interest-free BNPL. The moment you also offer any other regulated credit — interest-bearing finance, or instalment finance over more than 12 months — you're carrying out credit broking and need authorisation as normal.
• Selling in the customer's home. If you're a "domestic premises supplier" (you offer to sell during visits to customers' homes), the BNPL carve-out does not apply to you, and you'll need authorisation even for introducing BNPL.

Which permission do retailers need?

If you offer point-of-sale finance that needs authorisation, the tier you need is almost always limited permission. The reasoning is simple: selling goods is your main business and finance is secondary, so 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 retailer 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 sales, or if you lent your own money so customers repaid you directly. Full permission carries heavier requirements, higher fees, and closer FCA scrutiny.

The alternative worth knowing: appointed representative status

Getting your own authorisation isn't the only legal route. You can instead become an appointed representative (AR) of a firm that's already authorised — often 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. A lighter version, the introducer appointed representative (IAR), lets you only introduce customers to an authorised firm.

It's a genuine and popular route, but it has trade-offs. 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. By contrast, 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 or IAR status can suit a very small or brand-new retailer happy to work within one principal's panel with minimal regulatory involvement. Direct limited permission tends to suit retailers who want independence: their own authorisation, freedom to work with any lender, no ongoing network fee, and full control of their finance proposition. Many retailers 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 retailers 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 (those "0% finance" banners are caught), 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. 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 retailers 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 £560 for a limited permission credit broking firm, paid to the FCA when the application is submitted. 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, the decision is the FCA's and it does not commit to a date. Incomplete applications are the main cause of delay: the FCA's assessment does not begin in earnest until it has everything it has asked for.

What happens if you offer finance without authorisation

Where authorisation is required, this isn't a grey area worth gambling on. Arranging or introducing regulated finance without being authorised — and without operating as an appointed representative — is a criminal offence. It can also make your credit agreements unenforceable, and it exposes the business to FCA enforcement and reputational damage. If there's any doubt about whether the finance you offer needs authorisation, confirm your position before you start offering it.