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Consumer credit licences demystified

December 9, 2020

One of the most common questions we hear is ‘Do I need a Consumer Credit Licence’? It can be confusing as the Financial Conduct Authority (FCA) regulates a wide variety of financial organisations and so the advice and guidance around CCLs (now known as FCA authorisation) is very broad.

We work with hundreds of merchants who have successfully applied for and hold FCA Authorisation. Being authorised by the FCA allows them to:

  • Make monthly repayments more affordable for customers by letting them spread the cost over more than a year
  • Lower the cost of offering finance by reducing subsidies
  • Maximise acceptance rate by offering customers a range of loan types with AcceptPlus

Applying for FCA authorisation is not as complicated or arduous as many companies may think so we’ve set out to debunk some of the most common myths we hear …

I don't need FCA authorisation

Merchants don’t have to have FCA authorisation. It’s not required for those offering interest-free credit over a period of 12 months or less. However, those with FCA authorisation can offer a much boarder range of finance options including higher interest rates and longer term loans. This helps meet the needs of more customers and increases conversion.

It's complicated to apply for FCA authorisation

To apply for FCA authorisation you need to complete an online form on the FCA website. It’s relatively straightforward and there are plenty of videos, guidance notes and explanations provided.

FCA authorisation is expensive

It’s actually relatively inexpensive. The cost depends on how much income you expect to get through finance and the maximum is just £500. Also the cost of providing customers with interest-bearing loans is less as any subsidies are lower than for interest-free credit.

I need a lawyer to apply for me

Merchants can apply for their own FCA authorisation through the FCA website. There’s no need to have a third party apply for you unless you feel you need additional advice and guidance.

I don't know what licence to apply for

Most companies looking to offer Deko finance need a limited permission licence, the main exception being those who sell in the customers’ home.

It's too late

Merchants can apply for FCA authorisation at any time. There’s been some confusion about deadlines and timescales however this only applied to merchants who held a CCL before 2014 when it was regulated by the Office of Fair Trading.

Regulation is always bad

Consumer finance is a regulated activity to protect consumers. By ensuring merchants meet the threshold requirements and are aware of their responsibility to treat consumers fairly, the FCA are protecting the reputation of the industry and the ability for consumers to borrow responsibly.

Companies large and small have been granted FCA authorisation to offer consumer finance as the benefits are huge. Don’t let a small bit of paperwork put you off accessing this great sales tool that can increase revenues by 45% and raise average order values by 40%. It’s easy to do and gives your customers a convenient way to spread the cost of the important things in life.

For more information on FCA authorisation, please contact us to speak to one of our experts.