How to get an FCA consumer credit licence: a step-by-step guide

What is an FCA consumer credit licence?

First, a quick point on terminology. Strictly speaking, there is no longer such a thing as a "consumer credit licence." Until 2014, these were issued by the Office of Fair Trading. Since then, the Financial Conduct Authority (FCA) has regulated consumer credit, and what you actually need today is FCA authorisation (also called "permission") to carry out consumer credit activities. Most people still call it a "licence," so we will too — just know that when you apply, you're applying for FCA authorisation.

In plain terms: if your business lets customers borrow to pay, or introduces them to someone who will lend to them, you are carrying out a "regulated consumer credit activity" — and you need the FCA's permission to do it legally.

Do you actually need one?

You almost certainly need authorisation if your business does any of the following:

• Lets customers pay in instalments;
• Offers goods or services on credit;
• Introduces customers to a lender or finance broker.

Common examples include a car dealer offering finance on a vehicle, a retailer with a "buy now, pay later" option, a vet or dental practice offering treatment payment plans, or a home-improvement firm arranging finance for a new kitchen or set of windows.

There are some exemptions — for instance, certain interest-free agreements repayable in a small number of instalments within twelve months can fall outside the rules. But the detail is nuanced, and the consequences of getting it wrong are serious: operating without authorisation when you need it is a criminal offence, and it can make your credit agreements unenforceable. If there's any doubt, it's worth confirming your position before you start offering finance.

Limited permission vs full permission: which do you need?

The FCA divides consumer credit authorisation into two levels, and knowing which one applies to you is the single most important thing to get right.

Limited permission

This is for businesses where offering credit is secondary to your main trade. The classic example is a shop or garage that sells its own products or services and offers finance simply to help customers pay. Car dealers, retailers, vets, dentists and similar businesses usually fall into this category. Limited permission is simpler and cheaper to apply for, and it's what the majority of small businesses offering finance actually need.

Full permission

This is for businesses whose main activity is credit itself — lenders, debt management firms, and credit brokers whose core business is arranging finance for others. If finance is the heart of what you do rather than a bolt-on, you'll most likely need full permission. For a fuller comparison, see our guide to limited permission vs full permission.

What you'll need to apply

The FCA wants to see that your business is run properly and treats customers fairly. For a limited permission application, you'll typically need to prepare:

• A regulatory business plan — explaining what you do, how finance fits in, and who your customers are;
• Compliance arrangements — how you'll monitor that you're following the rules;
• Key policies — covering areas such as financial promotions (how you advertise finance), complaints handling, treating vulnerable customers fairly, and anti-money laundering;
• Financial information — basic figures or forecasts showing the business is viable;
• Details of the responsible person — limited permission firms need an individual approved to hold a senior management function, and the FCA assesses whether they are "fit and proper."

This is the part that puts many small business owners off — but it's largely a matter of preparing the right documents, in the right format, saying the right things. It's process, not magic.

The application process, step by step

1. Register on FCA Connect. This is the FCA's online portal for applications. You set up an account for your firm.
2. Complete the application. You provide your business details and upload the documents above.
3. Pay the FCA's application fee. This is paid directly to the FCA and is non-refundable (see costs below).
4. Nominate your approved person. This is the senior manager the FCA will assess as fit and proper.
5. Submit and respond to questions. An FCA caseworker reviews your application and may come back with follow-up questions, usually with a short window to respond.
6. Receive your authorisation. Once approved, you're authorised and listed on the FCA's Financial Services Register, and you can offer finance legally.

How much does it cost?

There are two separate costs to budget for:

• The FCA's application fee — currently around £550 for a limited permission application. The FCA sets and occasionally changes its fees, so it's worth checking the current figure on its website. This is paid directly to the FCA.
• Preparing the application — you can do this 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, to maintain your permission. For a full breakdown, see our guide to how much a consumer credit licence costs.

How long does it take?

Six months is the FCA's statutory limit for deciding a complete application — and it has up to twelve months if your application is incomplete. In practice, complete limited permission applications are often decided more quickly, but that's a typical outcome rather than a guarantee. The timeline depends heavily on submitting a complete, well-prepared application first time: incomplete applications and lengthy back-and-forth with caseworkers are the main cause of delay, which is why getting the documents right at the outset matters so much.

After you're authorised

Authorisation isn't a one-off event. Once you're authorised you'll have ongoing obligations: paying your annual FCA fee, keeping to the FCA's consumer credit rules (set out in its "CONC" sourcebook), continuing to treat customers fairly, and submitting periodic information to the FCA. For a limited permission firm these obligations are proportionate to your size — but they're real, and staying compliant is part of holding your permission.