MEMA Scope · Assessment

Do consumer lenders need FCA authorisation?

A firm lends money to individuals, sole traders or small partnerships through loans, hire purchase, credit cards or similar products. Review the initial view below and answer a few questions to refine it.

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Initial viewProvisional assessment

Potential regulated activity identified

Consumer lending may require FCA authorisation

Entering into a regulated credit agreement as lender, or exercising a lender’s rights under one, normally needs direct authorisation. Appointed representative status is not available for entering into agreements as lender.

Route to consider: Direct authorisation (full permission)

Credit Lending

Why this was flagged

  • 1Lending to individuals under regulated credit agreements is a regulated activity unless the agreement is exempt.
  • 2Collecting or administering your own loans may be covered by the same permission or a related one.

Questions still to resolve

Answer to refine the view. The result updates as you go.

  • ?

    Will you or a third party collect and administer the loans after they are made?

  • ?

    Will you only lend to limited companies and large businesses, not to individuals, sole traders or small partnerships?

  • ?

    Will brokers or retailers introduce customers to you?

Regulatory basis to examine

RAO Art.60B Regulated credit agreementsRegulated credit agreements: lending (opens in a new tab)PERG 2.7 Activities: a broad outlinePerimeter guidance on lending (opens in a new tab)CONC 5 Responsible lendingResponsible lending: creditworthiness and affordability (opens in a new tab)CONC 7 Arrears, default and recoveryArrears, default and recovery (opens in a new tab)

Your next steps

  1. 1Confirm that your products are regulated credit agreements and not exempt
  2. 2Build the creditworthiness and affordability assessment (CONC 5)
  3. 3Design arrears, forbearance and vulnerable customer procedures (CONC 7)
  4. 4Prepare financial forecasts and evidence of adequate resources (COND 2)

Where applications for this model most often fall short

  • A documented affordability and creditworthiness model with sample decisions
  • Capital and liquidity forecasts that stand up in a downturn
  • A clear funding and collections plan
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This is an initial indication from published FCA material, not an FCA determination or legal advice.

Continue with a more detailed readiness assessment

If authorisation is required, check the firm’s governance, policies, resources and application preparedness.

Will the FCA Authorise Us?

MEMA Scope gives an initial view from published FCA material. It is not legal advice or an FCA determination. Automatic matching and typed questions use AI only to choose a profile and to answer from vetted guidance; the assessment itself is never written by AI.

About this business model

A firm lends money to individuals, sole traders or small partnerships through loans, hire purchase, credit cards or similar products.

Entering into a regulated credit agreement as lender, or exercising a lender’s rights under one, normally needs direct authorisation. Appointed representative status is not available for entering into agreements as lender.

This page gives an initial view from published FCA and legislation sources. It is not an FCA determination or legal advice. Not your business model? Describe your business in MEMA Scope.

Consumer lender: frequently asked questions

Do I need FCA authorisation to lend to consumers?

Entering into a regulated credit agreement as lender is a regulated activity under RAO Art.60B unless the agreement is exempt. Most consumer lending is within scope, so direct authorisation is normally required.

Can I lend as an appointed representative?

Appointed representatives are a route for certain activities such as credit broking. Entering into regulated credit agreements as lender normally requires the firm’s own authorisation.

What could change the answer for consumer lenders?

Entering into a regulated credit agreement as lender, or exercising a lender’s rights under one, normally needs direct authorisation. Appointed representative status is not available for entering into agreements as lender. It can change depending on the answers to questions such as: Will you or a third party collect and administer the loans after they are made? Will you only lend to limited companies and large businesses, not to individuals, sole traders or small partnerships? Will brokers or retailers introduce customers to you?

Which FCA rules should consumer lenders look at first?

Start with: Regulated credit agreements: lending; Perimeter guidance on lending; Responsible lending: creditworthiness and affordability; Arrears, default and recovery. This is an initial view from published FCA material, not an FCA determination.

What are the first steps for consumer lenders?

Confirm that your products are regulated credit agreements and not exempt. Build the creditworthiness and affordability assessment (CONC 5). Design arrears, forbearance and vulnerable customer procedures (CONC 7). Prepare financial forecasts and evidence of adequate resources (COND 2).

Businesses we check

MEMA Scope covers 32 common business models. Each page explains whether that kind of business may need FCA authorisation, the rules to look at and the routes to consider.

Want a consultant to look at your facts?

Book a free scoping call and we will map the permissions, evidence and timeline for your firm.

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