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 CF4 | Director Non-Executive Director Chief Executive Partner | All firms except:
|
Required Functions | CF8 | Apportionment and oversight function | Applies to individuals performing this function in the following firms only
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:
- which is a borrower-lender agreement or a P2P agreement;
- in relation to which the APR is equal to or exceeds 100%;
- 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; - which is not secured by a mortgage, charge or pledge; and
- 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.’