Consumer Credit Licence

If your business provides credit facilities to customers you will need to ensure you comply with the Consumer Credit Act and the Consumer Credit Directive and in turn you will need a Consumer Credit Licence. This isn’t just for large businesses such as credit card companies or loan providers but can also apply if you allow customers to buy on credit or if you hire or lease goods.

Do you need a consumer credit licence?

Consumer Credit Licence - Credit CardsIf you do any of the following then in most instances you will need a licence:

  • sell on credit.
  • hire or lease out goods for more than three months.
  • lend money.
  • issue credit cards or trading checks.
  • arrange credit for others.
  • offer hire-purchase terms.
  • collect consumer credit debts.
  • help people with debt problems.
  • advise on people’s credit standing.
  • administer agreements for creditors or assignees but do not collect debts.
  • help individuals to find and correct records about their financial standing.

If so then you will need to apply to the Office of Fair Trading (OFT) to get your Consumer Credit Licence and you pass their approvement criteria.

You’re unlikely to need a licence if you only do the following:

  • only deal with limited companies or Limited Liability Partnerships.
  • offer no other form of credit other than accepting credit cards issued by someone else.
  • allow customers to pay their bills in four or fewer instalments over a year.

Apply for a consumer credit licence

If you are required to have a consumer credit licence and don’t have one then you are breaking the law and could face a large fine or even prison so apply for your licence now.