Apply for full authorisation with FCA
Written by Charlie Palmer on 10/08/2018

Full and limited permission for consumer credit

One of the most confusing things about FCA is the type of permission.

In fact there are an astonishing 64 varieties of Consumer Credit permission alone. Is that enough for you?

The FCA has maintained its limited authorisation regime.

The categories are now as follows:

Limited permission

Full permission

Consumer Credit Lending (where the activity is a secondary business activity of a firm whose primary business is selling goods or non-financial services and the credit is provided without interest or charges; excluding hire purchase and conditional sale)

Consumer Credit Lending (other than where the limited permission applies)

Consumer Hire (where this is the only regulated activity being carried out or, if there are other regulated activities, they also qualify for limited permission)

Consumer Hire (other than where the limited permission applies)

Debt Adjusting by not-for-profit bodies

Debt Adjusting by for-profit bodies

Debt Counselling by not-for-profit bodies

 

Debt Counselling by for-profit bodies

Debt Collecting

Debt Administration

Credit Information Services by not-for-profit bodies

 

Credit Information Services by for-profit bodies

Credit References

Credit Broking (where the firm’s main business is selling goods or non-financial services and this is ancillary to that main activity, including Green Deals)

 

Credit Broking where this is carried on as the main business activity or where it is carried on by a ‘domestic premises supplier’

Operating an electronic system in relation to lending (peer-to-peer lending)

The FCA has also confirmed that a firm can have limited permission (for certain regulated consumer credit activities) and also be an appointed representative for other regulated non-consumer credit activities. How confusing!

For example, a firm can have limited permission for credit broking (where it is ancillary to its main business) and be an AR for its insurance mediation activities. Phew!

Appointed representatives and self-employed agents 

A firm cannot be an appointed representative for more than one principal. However an individual can act for multiple firms without restriction.

Approved persons 

the approved person regime applies as follows:

Significant Influence Functions

Number

Description

Applies to:

Governing Functions

 

CF1

CF2

 
CF3

CF4

Director

Non-Executive Director

Chief Executive

Partner

All firms except:


  • firms with limited permission
  • some authorised professional firms
  • sole traders
  • introducer appointed representatives / sole traders
  • Appointed Representatives who carry on the regulated activity as a secondary business activity are only required to have one individual approved for a governing function.


Required Functions

 

CF8

 

Apportionment and oversight function

 

Applies to individuals performing this function in the following firms only


  • firms with limited permission (excluding not-for-profit debt advice bodies)
  • some authorised professional firms.


It used to apply to other firms, but it doesn’t now!

CF10

 

Compliance oversight Function

 

Applies to individuals performing this function in the following firms (including sole traders that employ staff involved in the carrying on of regulated activities):

debt management firms

credit repair firms

all other firms with higher licences.

For all other firms, compliance should be overseen by senior management but does not need to be separately approved.

CF10a

 

Client Asset Operational Oversight Function

 

Director or senior manager in large debt management firm

Smaller debt management firms and not-for-profit providers will still need someone to oversee the firm’s client asset arrangements but they do not need to be separately approved. In the case of debt management firms this person must be someone who has been approved for a SIF function.

CF11

 

Money Laundering Reporting Function

 

All firms that are covered by the Money Laundering Regulations (including sole traders that employee staff involved in the carrying on of regulated activities) but not for firms with limited permission.

Systems and controls functions

 

CF28

 

Systems and Controls Function

 

All firms except:

firms with limited permission

Significant Management function

 

CF29

 

Significant management function

 

All firms except:


firms with limited permission

Customer-dealing functions

CF30

Customer Function

Not required for firms carrying out consumer credit related regulated activities, nor for MGI work, but it is relevant for corporate finance, IFA and DFM work.

In small firms, a single person can have responsibility for a number of controlled functions - for example, director and money laundering reporting officer.

Conduct standards

 

  

High-cost short-term credit

Definition 

The FCA definition of ‘high-cost short-term’ credit is known as a HCSTC agreement is:

‘a regulated credit agreement:


  1. which is a borrower-lender agreement or a P2P agreement;
  2. in relation to which the APR is equal to or exceeds 100%;
  3. either:

    (i) in relation to which a financial promotion indicates (by express words or otherwise) that the credit is to be provided for any period up to a maximum of 12 months or otherwise indicates (by express words or otherwise) that the credit is to be provided for a short term; or

    (ii) under which the credit is due to be repaid or substantially repaid within a maximum of 12 months of the date on which the credit is advanced;
  4. which is not secured by a mortgage, charge or pledge; and
  5. which is not:

    (i) a credit agreement in relation to which the lender is a community finance organisation; or

    (ii) a home credit loan agreement, a bill of sale loan agreement or a borrower-lender agreement enabling a borrower to overdraw on a current account or arising where the holder of a current account overdraws on the account without a pre-arranged overdraft or exceeds a pre-arranged overdraft limit.’
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