Here we list some typical misconceptions about the way we authorise lenders. Then we give you the facts.
✘ A firm that uses credit reference agency data needs to have permission from the FCA to provide credit information services.
✔ If you access information from a credit reference agency only for your own purposes (e.g. in order to make a lending decision), you are unlikely to need permission to provide credit information services. However, if you use the information to advise a customer or take steps on their behalf, you will need this permission.
✘ A firm providing instalment credit doesn’t require authorisation.
✔ Only some types of instalment credit are exempt from authorisation. Your firm will only likely be exempt if the credit is interest-free and doesn’t carry any charges like administration fees. It must also be paid back within 12 months, across a maximum of 12 payments.
✘ A firm not covered by the instalment credit exemption can still get limited permission if it doesn’t charge interest.
✔ You will be eligible for limited permission only if your main business doesn’t involve the sale of goods or delivery of non-financial services and you avoid interest and all other charges too. This includes default charges and fees relating to the provision of credit.
Bear in mind that limited permission does not cover hire-purchase or conditional sale agreements.