Consumer credit firms and authorisation

Here’s a checklist of the main things you need to do before applying to us for authorisation. 

9 things to do before applying

  1. Have ready your National Insurance or passport number (for sole traders and any approved persons).
  2. have ready any relevant business documents, such as  draft agreements, pre-contract information, promotional literature and website screenshots.
  3. Calculate the highest projected amount of client money (if your firm holds this) and consumer credit income expected over the next 12 months.
  4. Establish the regulated financial activities you will carry out.
  5. Have ready your employment history for the past 5 years, residential addresses for the past 3 years and details of significant events for each approved person.
  6. Have ready details of partners, shares, subordinated loans or other external funding.
  7. Have ready an understanding of  who will be the firm’s approved persons and how your firm will manage risks from money laundering and money laundering reporting officer (if applicable).
  8. Prepare a business plan.
  9. Complete the IT self-assessment questionnaire

IT self-assessment questionnaire

Complete the IT self-assessment questionnaire to discover if you need to fill in the IT controls form, detailed IT controls form (or neither form).

Download the IT self-assessment questionnaire (DOC)

Read the notes to the questionnaire (PDF)

Business plan

Many  applications for authorisation  are delayed because the business plan is not detailed enough. Here are some things to include

  • your business with existing customers and why your firm wishes to carry out regulated activities
  • whether your firm has identified a business opportunity or customer base
  • where customers will be sourced from with details of any lead generators or brokers
  • services (both regulated and non-regulated) your firm will sell as well as the areas you specialise in
  • experience your firm’s governing body or senior management have of the regulated activities you wish to carry out
  • background and experience of everyone performing significant influence controlled functions (including their  employment background and copies of relevant qualifications/examinations)
  • your long-term strategy as well as your plans for financial
  • fees and how they are explained to the customer
  • promotions and communications, including how they comply with CONC 3

Credit lenders

Please include in your business plan:

  • summary of your firm’s positioning in the credit market and how your products compare to competitors
  • summary of any security or guarantees your firm has and how customers are notified of this
  • how you deal with customers who are in arrears on their repayment (including methods of contacting the customer, assessments of whether they are in financial difficulty and details of any forbearance)
  • details of any second charge mortgage business
  • full details of how employees or agents of your firm will be paid
  • payments to lead generators or brokers

Pawnbrokers

Please include in your business plan:

  • procedures for mitigating the risk of fraud/crime (eg how you establish ownership of the pledged item)
  • how you ensure the accurate valuation of items
  • what happens if the customer wishes to redeem their item including details of how you calculate and communicate to the customer (before contract completion) interest and other charges

Home collected credit firms

Please include in your business plan:

  • number of agents who distribute your firm’s loans
  • details of how agents are paid
  • the geographical spread of your firm’s activities
  • how you oversee agents, including training, monitoring, required documentation, payment, recruitment (including due diligence carried out on the agent), complaints handling and debt collection (including assessment of whether the customer is in financial distress and when to apply forbearance).

High-cost short-term credit firms

Please include in your business plan:

  • how your firm refinances its short term high cost credit agreements
  • how much income is expected from  loans repaid and how much from fees/charges for late payment.
  • estimated percentage of loans which will not be repaid on, or before, the original due date, as well as the reason for this.
  • interest and charges applied  to your high-cost short-term credit agreements, how these are communicated to the customer and how they comply with CONC 5A rules on the cost cap

If you arrange high-cost short-term loans on an electronic system, please tell us how your firm makes sure it doesn’t impose or collect charges in excess of the cost cap – as explained in CONC 5A.3

Bill of Sale firms

Please include in your business plan:

  • when the asset is taken if there are arrears (and any forbearance considered)
  • allowance for depreciation of the asset
  • how you carry out a credit worthiness assessment on a prospective borrower
  • how debts are collected including arrears handling

Debt counselling, debt adjusting and credit information firms

Please include in your business plan:

  • plans to promote your debt management activities or other services (including any drafts you have)
  • your debt counselling process and copies of the documents you provide to the customers

Firms with Appointed Representatives (ARs)

Please include in your business plan the number and geographical spread of your ARs, how they will be recruited and monitored  in their work, who will monitor them and what fees will be paid.

Authorisation criteria

To become an authorised consumer credit firm, you have to show you meet our minimum standards – known as our ‘threshold conditions’. You also have to comply with our principles, rules about systems and controls and Consumer Credit Sourcebook rules.

Limited or full permission

Depending on the regulated financial activities your consumer credit firm carries out, you’ll have to apply to us for either limited or full permission. The minimum standards for limited permission and full permissions applications are different from each other.

Use our step-by-step tool to find out if you should apply for limited or full permissions.

Not-for-profit bodies have some different questions to consider about limited and full permission. See the not-for-profit bodies decision tool.

If you apply for the wrong permission, your application will be delayed.

    Permission types and fees

    The types of consumer credit permissions that are available and how to decide which permission to apply for.

     

    Other types of firms

    Go to related content