If you plan to lend money to consumers as a business, you almost certainly need permission from the Financial Conduct Authority (FCA). One point to clear up first: the old "consumer credit licence" issued by the Office of Fair Trading no longer exists, since 1 April 2014, consumer credit has been regulated by the FCA, and what you need is FCA authorisation. Here is how it works in England and Wales.
Consumer lending is a regulated activity
Lending to consumers under a regulated credit agreement is a regulated activity under the Financial Services and Markets Act 2000 (FSMA). That means you must be authorised by the FCA (or be exempt) to do it by way of business. Carrying on a regulated activity without authorisation breaches the general prohibition (FSMA, s 19), which is a criminal offence, and a regulated credit agreement made by an unauthorised lender can be unenforceable against the borrower without a court order.
The substantive rules protecting borrowers still largely come from the Consumer Credit Act 1974 (and FCA rules), covering things like pre-contract information, the form of agreements, and borrowers' rights.
When authorisation is needed, and when it may not be
You generally need FCA authorisation if you lend to individuals (and certain small partnerships) under regulated credit agreements as a business, including running a lending business, but also activities like credit broking and debt collecting.
Some lending is not regulated consumer credit, for example:
- lending purely business-to-business (to companies, or to large partnerships), which is normally outside the consumer credit regime; and
- certain exempt agreements (the exemptions are technical, for example, some interest-free or limited-instalment arrangements may fall outside, depending on the precise terms).
These exemptions are narrow and easy to get wrong, so do not assume one applies without checking.
How to become authorised
You apply to the FCA for the relevant permissions. The FCA assesses whether you meet its threshold conditions (adequate resources, fit and proper management, suitable systems and controls), and key individuals are subject to the Senior Managers and Certification Regime. You will need compliant documentation and processes for affordability checks, fair treatment of customers, and handling arrears.
Practical guidance
- If you lend to consumers, plan for FCA authorisation, the OFT licence regime is gone.
- Check whether your lending is genuinely outside the regime (e.g. pure B2B) before relying on that.
- Build in Consumer Credit Act and FCA compliance (agreement form, disclosures, affordability, arrears handling).
- Take specialist regulatory advice before lending.
Key takeaways
- The old OFT consumer credit licence was abolished in 2014, you now need FCA authorisation.
- Consumer lending is a regulated activity under FSMA 2000; doing it unauthorised is a criminal offence and can make agreements unenforceable.
- Business-to-business lending and certain exempt agreements may fall outside, but the exemptions are technical.
- The Consumer Credit Act 1974 and FCA rules still govern how regulated lending must be done.
Sources
- Financial Services and Markets Act 2000 (general prohibition; regulated activities)
- Consumer Credit Act 1974 and the FCA's consumer credit rules (CONC)
- Transfer of consumer credit regulation from the OFT to the FCA (from 1 April 2014)
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified financial-services solicitor.