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What is the difference between limited and full permissions?

While this is a complex area, the basic principle is that if finance or credit is the primary business activity then full permission is required. This may refer to credit brokers or consumer credit lenders. 

If offering finance or credit is a secondary activity, where the main business is selling goods or services, then limited permission is applicable. This could include, for example, car dealerships offering finance options to customers.

These definitions are by no means comprehensive - speak to a member of our team for more information.

What does "principal firm" and "appointed representative" mean? How do I know whether I am a principal or an appointed representative?

In broad terms, an appointed representative is a business which is not authorised, but which has a contract with a firm (called 'the principal') that allows it to carry on certain activities under the permission of the principal.

  • A business cannot be an appointed representative for a regulated activity if:
  • it does not have a contract with a principal firm which allows or requires it to carry on business
  • its principal firm has not accepted responsibility in writing for the regulated activity the business undertakes in
  • the firm that the business wants to act as its principal only holds an interim permission for the relevant credit activity
  • it operates a credit reference agency
  • it provides credit (unless the credit is free of interest and any other charges)
  • it is authorised for another activity.

However, the exceptions to this are:

  • a firm with an interim permission for a credit activity may also be an appointed representative for a FSMA regulated activity that is not covered by its interim permission
  • a firm with a limited permission for certain credit activities will be able to be an appointed representative for other regulated activities. E.g. a motor dealer with a limited permission to carry on credit broking can also be an appointed representative insurance intermediary.
What is the process for second charge firms and authorisation?

The FCA and the Government will consult on the longer term regime for second charge mortgages once there is greater clarity on the outcome of the Mortgage Credit Directive. This will determine what the process will be for authorisation for second charge firms. Second charge firms should still register for interim permission under the consumer credit regime, and new entrants to the second charge market from April 2014 (who do not hold a CCA licence and cannot get an interim permission) will need to apply for full consumer credit permission.

When I need to apply for FCA authorisation what do I do?

The forms required for full authorisation will be available on the FCA website. Firms that have interim authorisation will be notified by the regulator when they need to apply for full authorisation in due course.

Who qualifies for limited permission?

In summary, firms which only carry on the following activities:

  • credit broking, as a secondary activity to a main business selling goods or non-financial services, for the purpose of financing the purchase of those goods or services  – for example, motor dealerships and high-street retailers that introduce consumers to a finance provider (this activity excludes persons who sell goods or services in customers’ homes other than on an occasional basis);  
  • not-for-profit bodies providing debt advice – for example, Citizens Advice; consumer hire – for example, tool and car hire firms;
  • Consumer credit lending (except hire purchase or conditional sale) on an interest and charges-free basis by a person whose main business is to sell goods or non-financial services – for example, golf clubs or gyms allowing deferred payment for membership.
  • Persons who carry on the lending, broking and hiring limited permission activities can also apply to carry on, as a secondary activity, debt counselling, debt adjusting and credit information services.