FCA Authorisation for Consumer Credit Firms - A Guide

Authorisation is the cornerstone of the Financial Conduct Authority’s (FCA) regulatory regime. When you apply for authorisation you will have to provide detailed information about your business, its structure and financial resources - and you will need to gather most of this information before you start your application.

RB Compliance has produced a summary guide to applying for FCA authorisation for consumer credit firms to assist you with your journey to FCA authorisation. It is written on the assumption that full permission is required from the FCA, however, before commencing work on your application, it is recommended that you confirm full permission is required. Some firms are only required to apply for ‘limited permission’ to carry on regulated activity.

Full or limited permissions?

Whether you need to apply for limited permission or full permission depends on the regulated activities your firm will carry out. You can use the FCA’s decision-making tool to find out whether you need to apply for limited or full permission. You should bear in mind that your authorisation application will be delayed if you apply for the wrong permission category.

The firm application

As you will see from our guidance document, a significant amount of information must be prepared and summitted about your firm as part of the application. This covers a multitude of areas, including:

• Basic firm details

• Permissions sought and regulatory fees

• Consumer credit activities

• Disclosure of significant events

• Systems and controls

• Compliance controls

• Personnel information

• Owners and influencers

• Corporate partner/controller information

The regulatory business plan

Perhaps the most onerous aspect of the FCA application process is the creation of a dedicated and detailed regulatory business plan that must be uploaded to this part of the application as a separate document. The plan must convince the FCA that you have considered and assessed the key risks posed to your business and its customers and that there are appropriate safeguards in place to mitigate against these. As such, it will be a lengthy and detailed document and ample time should be allocated in advance to its preparation. It is recommended that your regulatory business plan is independently reviewed by an experienced compliance practitioner prior to submission.

At high level, the regulatory business plan should address the following key areas, which should then be broken down further:

• Background and Market Analysis

• Corporate Structure

• Business Strategy

• Marketing and Sales

• Governance & Compliance Strategy

• Fair Treatment of Customers

• Data Protection

• Risk Management

• Change Management

• Financial Crime

• Procurement/Supplier Management

• Financial Position and Projections

Supporting documentation

In addition to completing the FCA’s application questions, which in themselves will require the prior preparation of a lot of information, you will be required to attach a number of supporting documents to your application:

• Regulatory business plan (see below for more information)

• Compliance monitoring programme

• Organisational structure chart

• Firm controller structure chart

• Approved persons and director/partner CV’s

• Accounts information:

• an opening balance sheet

• forecast closing balance sheet for first 12 months

• monthly cashflow forecast for first 12 months

• monthly profit and loss forecast for first 12 months

The following documents are not, strictly speaking, required at the point the application is submitted (though you may choose to provide them to the FCA) but it is highly recommended you ensure they are in place prior to submission, as the FCA ask you to confirm that they exist and are ready to inspect, should the FCA choose to do so:

• Full business continuity procedures (BCP)

• Any agreements or terms of reference agreed with any third party providing compliance or other services

• Any outsourcing arrangements for disaster recovery

Approved persons

In addition to the preparation and submission of the firm application, you will also be required to prepare and submit at least one approved persons application. Approved persons are senior managers and decision makers within the business whom the FCA must personally approve to undertake their role, including the likes of Directors, Executive and Non-Executive Directors and the Money Laundering and Reporting Officer, amongst others.

Many consumer credit firms will only require one approved person but this depends on the size, scope and nature of the regulated activity undertaken, as well as the firm’s organisational structure and apportionment of responsibilities.

In addition to the firm-level information provided, there is a significant amount of further information about these individuals that must be provided as part of your application – much of which relates to FCA’s assessment of the fitness and propriety of the candidate to hold the position. Download our guide for further information on the approved persons aspect of your FCA application.

Connect

The FCA’s online Connect system must be used to make applications and to provide the regulator with notifications (whereas scheduled regulatory reporting is submitted via their GABRIEL system). Before you begin preparing your application, it is a good idea to ensure you are registered to be able to use Connect.

Information on how to register for the Connect system can be found here:

https://www.fca.org.uk/firms/connect/registration

Once registered, you can log in to Connect here:

https://connect.fca.org.uk/firms/aupo_sitelogin

Further information and help on using Connect can be found here:

https://www.fca.org.uk/firms/connect/help

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