FCA licence for car dealers
If your dealership offers vehicle finance to customers, you may be wondering whether you need an FCA licence.
Many car dealers become aware of FCA requirements when they start introducing customers to finance providers or assisting with vehicle finance applications. While selling vehicles alone does not usually require FCA authorisation, certain finance-related activities are regulated and may require FCA permissions.
Understanding whether your dealership requires FCA authorisation is an important part of operating compliantly and avoiding unnecessary regulatory issues.
View our FCA authorisation support for motor dealers.
The term "FCA licence" is commonly used by motor dealers to describe FCA authorisation.
Where a dealership carries out regulated consumer credit activities, authorisation from the Financial Conduct Authority (FCA), or Appointed Representative status, will generally be required.
Many FCA-authorised car dealers hold permissions relating to credit broking and associated consumer credit activities.
Many customers purchase vehicles using finance rather than paying in full.
Where a dealership introduces customers to finance providers, assists with finance applications or carries out certain regulated consumer credit activities, those activities may fall within the FCA's regulatory framework.
This is why FCA authorisation is a common requirement across the motor trade.
Examples of activities that may require FCA authorisation include:
The permissions required will depend on the activities carried out by the business.
No.
The permissions required by a dealership depend on its business model and the activities it undertakes.
For example, a dealership introducing customers to third-party finance providers as part of vehicle sales may require different permissions from a business carrying out wider consumer credit activities.
This is why FCA permissions should always be considered on an individual business basis.
Many car dealers operate under Limited Permission FCA authorisation.
Limited Permission is often suitable where finance introductions are connected to vehicle sales and form a secondary part of the business.
Some dealerships may require Full Permission FCA authorisation depending on the nature and extent of their regulated activities.
The correct permission structure will depend on the firm's individual circumstances.
If a dealership carries out regulated consumer credit activities, FCA authorisation or Appointed Representative status will generally be required.
Dealers should avoid assuming that finance introductions can be provided without regulatory obligations applying.
Understanding whether your activities fall within FCA regulation is an important part of operating compliantly.
Dealerships should review:
The FCA provides guidance to help firms understand which permissions may apply.
Some of the most common misunderstandings include:
The permissions required will always depend on the activities carried out by the individual firm.
Understanding FCA requirements is an important part of operating a professional and compliant dealership.
Businesses that understand their regulatory obligations from the outset are often better placed to introduce finance products confidently and manage their ongoing compliance responsibilities.
Taking the time to understand FCA authorisation requirements before carrying out regulated activities can help avoid unnecessary problems later.
Car dealers generally require FCA authorisation if they introduce customers to finance providers or carry out regulated consumer credit activities. Selling vehicles alone does not automatically require FCA authorisation.
Used car dealers may require FCA authorisation where they introduce customers to finance providers or undertake regulated consumer credit activities.
Many car dealers hold permissions relating to credit broking and associated consumer credit activities. The exact permissions required depend on the dealership's activities and business model.
Limited Permission is often appropriate where finance activity is secondary to vehicle sales. Full Permission may be required where broader regulated consumer credit activities are carried out.
Where finance introductions constitute regulated activities, FCA authorisation or Appointed Representative status will generally be required.
009 Compliance provides administrative support to motor dealers throughout the UK.
We can help businesses understand FCA authorisation requirements, prepare information and support the administrative process involved in FCA applications and ongoing compliance obligations.
Please note that we do not provide regulated advice. Responsibility for ensuring the correct permissions are obtained always remains with the business.
If you need help understanding FCA authorisation requirements for your dealership, contact 009 Compliance today.
View our FCA authorisation support for motor dealers.
