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The OFT closed on 31 March 2014 and this website is no longer being updated. The OFT's work and responsibilities have passed to a number of different bodies. Read more.

Do you need a credit licence?

Introduction

These pages provide a guide for businesses about consumer credit licensing and are intended to help you decide whether you need a consumer credit licence and which categories of licence to apply for.

You should read the information here before applying for a consumer credit licence.

Please also be aware that regulation of consumer credit is changing. The Financial Conduct Authority will take over regulation of consumer credit from the OFT on 1 April 2014.

All firms who currently hold a Consumer Credit Licence (CCL) will only be able to trade under their existing CCL until the 31 March 2014.  All consumer credit licences expire on this date at midnight and if you have not taken action you will not be able to continue your licensable activities.

All firms who wish to continue trading after 31 March 2014 will need to be registered with the FCA.  From 2 September 2013, current OFT licence holders can register with the FCA for 'interim permission' to carry on regulated activities from 1 April 2014. 

For more information see credit changes

Who needs a consumer credit licence?

If your business sells goods or services on credit, offers goods for hire or provides debt counselling or debt adjusting services to consumers, you almost certainly need to be licensed by the OFT.

Engaging in licensable credit activities without a credit licence is a criminal offence, and can result in a fine and/or imprisonment. Businesses cannot normally legally enforce a credit agreement if they are not licensed.

For more information see penalties and requirements.

Read more about who needs a consumer credit licence.

Examples of categories typically applied for by particular types of business

You should only apply for the licence categories actually needed for the credit activities carried out by your business.

It is important that you identify the credit activities that you actually carry out - you will need to select the relevant categories on your application and we may require you to explain why you are requesting certain categories of licence. We find that many businesses apply for categories they do not need and this delays the application process.

Here are some examples of categories typically applied for by particular types of business. You may find this helpful in deciding which categories to apply for.

Licence categories

You should only apply for the licence categories actually needed for the credit activities carried out by your business.

It is important that you identify the credit activities that you actually carry out - you will need to select the relevant categories on your application and we may require you to explain why you are requesting certain categories of licence. You should only apply for the licence categories actually needed for the credit activities carried out by the business. We find that many businesses apply for categories they do not need and this delays the application process.

Read more about licence categories.

Applying for a licence

What information do I need to give the OFT?

You will be required to fill in an application form. You may also be required to fill in a separate competence form.

The OFT takes a targeted and 'risk-based' approach to consumer credit licensing - if the activities your business undertakes are considered high risk you will need to provide evidence of your credit competence with your licence application.

Make sure you apply for the right categories of licence , and the right trading names - unlicensed trading is punishable by a fine, imprisonment, or both.

For further information on our trading names policy see the Misleading or Otherwise Undesirable Names guidance (pdf 271kb).

Any unlicensed trading, including by any associates, will also be taken into account when considering the fitness of a business to hold a licence.

'Associate' includes a wide range of individuals or businesses that may influence, or be influenced by, your business. The law on associates is complex. If you are unsure about who your associates are, you should seek independent legal advice.

Businesses cannot normally legally enforce a regulated credit agreement if the creditor was not licensed when it was entered into.

In some limited circumstances the OFT may grant a validation order, to allow a licensed creditor to apply to a court to enforce an agreement. See further information on validation orders.

Frequently asked questions

OFT guidance for businesses

Published guidance

Key OFT guidance for licensed businesses is available online:

Other OFT published guidance which may be of relevance to you is available in our publications section.

Where to go for more information 

Find further information about key aspects of consumer credit law.

The law is complex, and you will need to seek you own legal advice if you are in any doubt about how the Consumer Credit Act affects you. The OFT cannot advise you on which licence categories you need for your business.

Our telephone helpline can only offer general advice, for instance on how to apply, or if you are experiencing problems with an online application.

Our contact details are:

Consumer Credit Licensing
Office of Fair Trading
PO Box 62691
London
EC4PUW

Telephone: 08457 22 44 99
Email: enquiries@oft.gov.uk


 

The information on this website is a general guide only. The OFT cannot tell you if you need a licence, or which categories you need.

It is your responsibility to ensure you are appropriately licensed for the activities you undertake. If after reading the information on these pages you are still unsure whether you need a licence or which categories you should apply for, we recommend that you refer to Consumer Credit Act 1974 and/or seek professional advice.



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