Limited Permissions Applications

• Fca
• Foundation Degree

Limited Permissions Applications

Limited Permissions with Credit services:

The FCA allows limited permission firms, like car dealerships or vehicle finance providers, to carry out debt counselling and debt adjusting, but only in a narrow way- typically related to settling existing finance as part of a sale.

 Example:

If a customer part-exchanges a car with outstanding finance:

* The dealer settles the loan (debt adjusting)

* Explains the process to the customer (debt counselling)

Key Conditions:

* Must be incidental to another service (like selling a car) 

* Must not be the firm's main business

* Not allowed to operate as a dedicated debt advice firm

Incidental? 

This means that something is secondary or minor in relation to a main service, it is not the main business.

Key points: 

Not the primary source of business- Car dealerships sell cars, not offer finance.

Occurs as part or alongside of a main service- part exchanging a vehicle

Usually not advertised as a stand-alone offering

Limited Permissions + Debt Services don't usually go together! 

You cannot combine Limited Permissions with Debt adjusting or debt counselling permissions unless you're  intending to:

Help customers deal with debt (adjusting)

Give advice on how to manage debt (counselling) 

**These tend to be car dealerships**

Otherwise these debt permissions require Full FCA permissions- these carry more risk, higher standards and regulatory demands.

Which activity is allowed under Limited Permissions?

1. Debt Counselling
2. Credit Broking
3. Debt Adjusting
4. All of the above

What if you want to offer all three? 

If you plan to:

Introduce credit (credit broking)

Help customers deal with debt (adjusting)

Give advice on how to manage debt (counselling) 

Then you must:

Apply for full FCA authorisation

Have a robust compliance framework

Demonstrate fit and proper management

submit regular regulatory returns

Which goes where?

Answer

Credit Broking

Debt Adjusting

Debt Counselling

negotiating with a lender on behalf of a debtor

Introducing customers to lenders or finance providers

Giving advice to a consumer about managing their debts 

Broking for Consumer Hire and Hire Purchase

Credit broking doesn't just apply to loans- 

It also includes introducing customers to agreements like consumer hire and hire purchases.

Consumer hire is a rental agreement without the option to buy:

The customer pays to use the goods for a period without ownership transferring this is usually common in- Car leasing or Equipment hire. 

Example:

A car dealership refers a customer to a leasing company offering personal car hire. 

What is Hire Purchase? (HP)

A hire purchase is a credit agreement where:

The customer hires the goods with an option ti buy at the end

Ownership only transfers after the final payment.

This is usually common for:

Cars, Furniture or Electronics.

Example:

A dealership helps a customer apply for a HP financing to buy a car, introducing them to a third-party lender. 

Broking is involved when:

You're considered a credit broker if you:

Introduce customer to a hire or HP provider

Help arrange these arrangements

Assist in completing applications

Advertising third party hire/HP finance options. 

Is FCA permission required? 

Yes- both consumer hire and hire purchase broking are regulated activities under the FCA. 

You would need Limited consumer hire and hire purchase permissions if you're doing this incidentally (as a car dealer) 

Full permissions if it's your core business or involves a wider range of credit services. 

If your main business involves introducing customer to hire or HP providers which is best suited?

1. Full HP and Consumer Hire permissions
2. Limited HP and Consumer Hire Permissions
3. None of the above
4. Secondary Credit broking permissions

If you are a car dealer which permissions are best suited for your business?

1. Limited HP and Consumer Hire permissions
2. Full HP and Consumer hire permissions
3. Limited permissions credit broking.
4. None of the above

In Summary

Activity	Limited Permissions allowed?	Notes
Credit Broking	Yes	For secondary business (retailers, car dealers)
Debt Counseling	Yes	Only if incidental (explaining how to settle a car loan)
Debt Adjusting	Yes	Only to settle exsisting finance as part of another sale
Full Debt Management	No	Requires full FCA permissions