{"id":11180,"date":"2023-06-23T10:34:02","date_gmt":"2023-06-23T10:34:02","guid":{"rendered":"https:\/\/www.theukrules.co.uk\/?page_id=11180"},"modified":"2023-06-23T10:56:35","modified_gmt":"2023-06-23T10:56:35","slug":"offering-credit-to-consumers","status":"publish","type":"page","link":"https:\/\/www.theukrules.co.uk\/rules\/business\/sale-of-goods-and-services\/offering-credit-to-consumers\/","title":{"rendered":"Offering Credit to Consumers UK Rules and Regulations"},"content":{"rendered":"<h2>Authorisation from the FCA to Offer Credit<\/h2>\n<p>There may be situations where you want to offer a credit facility to your customers. In this case, you must be authorised by the Financial Conduct Authority.<\/p>\n<p>Offering credit to consumers without FCA registration is a criminal offence. The worst cases can result in a fine and prosecution &#8211; or imprisonment.<\/p>\n<p>You could also have further difficulties if a customer fails to make the required payments (details below).<\/p>\n<p><strong>Note<\/strong>: You would not be able to enforce this type of agreement if you did not have Financial Conduct Authority (FCA) authorisation.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"category-wrapper\">\n<div class=\"list-content\">\n<h5>FCA Rules You Must Follow<\/h5>\n<p>Your business would need to meet minimum standards to get FCA authorisation to offer credit to your customers. It would need to have a suitable business model and show that &#8216;fit and proper&#8217; people are running the firm.<\/p>\n<p>There would be extra rules to follow on how you run your business and treat your customers, such as:<\/p>\n<ul>\n<li><a href=\"\/rules\/business\/sale-of-goods-and-services\/unfair-contract-terms\/\">Avoiding unfair terms in sales contracts<\/a><\/li>\n<li>Consumer Credit Act 1974 (CCA)<\/li>\n<li>The Consumer Protection from Unfair Trading Regulations 2008<\/li>\n<li>The rules and guidance in the <a href=\"https:\/\/www.handbook.fca.org.uk\/handbook\" target=\"_blank\" rel=\"noreferrer noopener\">FCA Handbook<\/a> (including the &#8216;Perimeter guidance&#8217;)<\/li>\n<\/ul>\n<p>You would not need a licence if the customer will pay in four (4) or less instalments and within one (1) year of the date of sale.<\/p>\n<p>An example would be making a daily supply (e.g. milk or newspapers). In this case, you could collect the payment at the end of the month.<\/p>\n<p><strong>Note<\/strong>: The Financial Conduct Authority provides a checklist of the main things you need to do before <a href=\"https:\/\/www.fca.org.uk\/firms\/authorisation\/how-to-apply\/consumer-credit\" target=\"_blank\" rel=\"noreferrer noopener\">applying for consumer credit authorisation<\/a>.<\/p>\n<\/p><\/div>\n<div class=\"list-content\">\n<h5>FCA Consumer Credit Authorisation<\/h5>\n<p>The list of things you need consumer credit authorisation for is concise. You would need to check if they would apply to the proposed business of your firm.<\/p>\n<p>Common regulated consumer credit activities that you need to get FCA authorisation to carry out, include:<\/p>\n<ul>\n<li>Arranging credit for other people.<\/li>\n<li>Collecting or purchasing consumer credit debts.<\/li>\n<li>Helping people with debt problems (or advising on someone&#8217;s credit standing).<\/li>\n<li>Hiring or leasing out goods for more than three (3) months.<\/li>\n<li>Issuing credit cards.<\/li>\n<li>Lending money.<\/li>\n<li>Selling goods or services on credit (including hire purchase).<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: All businesses that offer credit or financing to customers (not only credit specialist companies) must have FCA authorisation. This rule also applies to non-profit organisations.<\/p>\n<\/p><\/div>\n<\/div>\n<div class=\"category-wrapper\">\n<div class=\"list-content\">\n<h5>If a Customer Fails to Pay the Required Amount<\/h5>\n<p>What action is available if a customer fails to make the required payments? In this case, you would need to send them a notice of default before taking any legal action. You would then be able to <a href=\"\/rules\/legal\/courts\/\">take court action<\/a> to enforce the agreement.<\/p>\n<p>You would only be able to make a default charge or debt collection costs to the customer if the original agreement included this particular right.<\/p>\n<p>You may decide to use a debt collection agency or pursue the debt yourself. But, using improper debt collection practices means you could lose your consumer credit licence. Thus, the regulations do not allow you to:<\/p>\n<ul>\n<li>Harass the customer. Examples include calling them late at night time or sending threatening letters.<\/li>\n<li>Send letters that imitate official court documents to the customer. In fact, doing so is a criminal offence in some cases.<\/li>\n<li>Send customers misleading or false documents to try and coerce a payment.<\/li>\n<\/ul><\/div>\n<div class=\"list-content\">\n<h5>Business to Business Lending Regulation UK<\/h5>\n<p>As a rule, there would be no need to have authorisation if your business only offers credit to other businesses. An exception would apply if the customer is:<\/p>\n<ul>\n<li>A sole trader<\/li>\n<li>A partnership with no more than three (3) partners<\/li>\n<li>An unincorporated association<\/li>\n<\/ul>\n<p>In most cases, providing credit to these types of customers would mean you need to be FCA authorised.<\/p>\n<\/p><\/div>\n<\/div>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"updated-data\">\n  <strong>Laws on Offering Credit to Consumers in United Kingdom<\/strong><br \/>\n  <time datetime=\"2022-01-01\">Last Updated 2022<\/time>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Authorisation from the FCA to Offer Credit There may be situations where you want to offer a credit facility to your customers. In this case, you must be authorised by the Financial Conduct Authority. Offering credit to consumers without FCA registration is a criminal offence. The worst cases can result in a fine and prosecution&hellip; <a class=\"more-link\" href=\"https:\/\/www.theukrules.co.uk\/rules\/business\/sale-of-goods-and-services\/offering-credit-to-consumers\/\">Continue reading <span class=\"screen-reader-text\">Offering Credit to Consumers UK Rules and Regulations<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":778,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Offering Credit to Consumers UK Rules and Regulations - UK Rules<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.theukrules.co.uk\/rules\/business\/sale-of-goods-and-services\/offering-credit-to-consumers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Offering Credit to Consumers UK Rules and Regulations - UK Rules\" \/>\n<meta property=\"og:description\" content=\"Authorisation from the FCA to Offer Credit There may be situations where you want to offer a credit facility to your customers. 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