Supporting material for applications by consumer credit, mortgage and other consumer finance firms

Your RBP will be one of the key documents we use to assess your application. It should set out:

• why you need to be authorised
• what you plan to do
• how you'll identify and manage the risks associated with your business

The page for your type of firm has specific information on what we're looking for in your RBP, based on your business model.

If you're not sure how to put your RBP together

Refer to our sample business plan[-98] which shows the areas that we typically expect applicants to cover.

Note that your RBP can't be generic – it must be tailored to your specific business.

You must include financial forecasts in your application.

Learn how to prepare your financial information[-97], which includes a Financial Analysis Template.

Our Consumer Duty[-96] sets the standard of care that firms should give to customers in retail financial markets. It reflects our expectations of firm conduct, and means that your firm must consider customer outcomes and place customers’ interests at the heart of your activities.

To help us assess whether you can comply with our Consumer Duty, please provide all of the following:

• target market analysis and identification
• product and service governance framework
• fair value assessment framework
• customer understanding assessment and testing framework
• customer support monitoring polices and supporting Management Information (MI) suite
• customer outcome monitoring framework
• root cause identification process

This isn't an exhaustive list – if you think we'd benefit from additional information, please include it.

This should demonstrate that you:

• have identified the nature and scale of vulnerabilities that are likely to be present in your target market and customer base
• can respond to customer needs throughout the lifecycle of a product (through design, delivery, customer service etc)
• have ensured your staff have the right skills and capabilities to recognise and respond to the needs of customers in vulnerable circumstances
• have systems and processes in place to support the delivery of good outcomes to all retail customers, including those in vulnerable circumstances
• can monitor and assess whether you're meeting and responding to the needs of customers with characteristics of vulnerability
• can take action to put things right if they go wrong

For more information, refer to our detailed guidance[-95] on the fair treatment of vulnerable customers.

This policy will need to:

• comply with our rules even if your main business is also subject to industry rules or guidance
• explain how you'll identify and deal with complaints in line with our timeframes
  • set out how staff will be trained to recognise, respond to and record customers' complaints
• explain how customers will receive a satisfactory resolution and be treated fairly
  • show that your firm's communications will be clear and transparent, keeping customers informed of progress, next steps and their rights
• explain how you'll use complaints to prevent things going wrong in the future, and prevent customers from suffering foreseeable harm

Your CMP should demonstrate:

• that you understand the risks your business faces and how you plan to control them
• that it's tailored to your business and relevant to the regulated activities you plan to carry on
• that you've identified the relevant FCA rules and guidance that apply to you, and have checks in place to ensure you comply with them
• who has responsibility for carrying out these checks, how often they'll be done and what record you'll keep confirming that they've taken place

Customers need to understand the products and services you sell. Your promotions should enable them to do this and should ensure that everything you say is clear, fair and not misleading.

If you're applying to be a credit broker

You'll also need to show how your financial promotions, and communications more generally, tell the customer:

• who they're dealing with
• that your firm is a broker and not a lender
• whether your firm works exclusively with one or more lenders, or works independently

If you want to approve financial promotions for unauthorised firms

You'll have to ask for permission to do so, explaining how you'll do it and comply with our rules, which will change on 7 February 2024.

Find out more about approving financial promotions for unauthorised persons[-94].

You must show that you can comply with your firm’s legal and regulatory requirements in relation to financial crime.

This policy should be readily accessible, effective and understood by all relevant staff.

If you outsource business activities, you should have a policy setting out how it will be done.

It should explain:

• which activities will be outsourced
• how you'll select the third parties you'll use (ie what due diligence you'll do)
• how you'll oversee what they do and put things right if they go wrong

This should be tailored to your business and explain how you would wind down your firm's business in an orderly manner to ensure you aren't trading while insolvent.

Please include:

• the different scenarios that could lead to a wind-down
• the related trigger points for each scenario
• how your firm will monitor the potential for wind-down
• the practical steps you'd take in winding down the business including the servicing of any in-flight loans

This plan should show how you would keep going if the worst happened.

It should be tailored to your business and the events that might impact your ability to function.

We consider this as being essential to promoting a risk-aware and ethically driven culture within your firm.

Your conduct risk framework should:

• clearly identify the conduct risks specific to your business
• explain how you'll mitigate these risks
• outline the management information you'll use to measure these risks and determine if your mitigations are effective
• set out clear reporting lines that create accountability

We expect firms to be resilient. Your tech, cyber and resilience policies should therefore:

• be proportionate to the scale and nature of your business and the risk of harm to consumers of service disruption or system or firm failure
• demonstrate that you have a comprehensive understanding of the people, processes, technology, facilities and information you need to operate
• show that you gather, process, store and use data safely

If you're a consumer credit lender or hirer, you must provide policies and procedures that set out how you'll:

• manage credit risk
• determine whether a customer can afford to repay credit
• tailor support for customers in, or at risk of, financial difficulty
• signpost or refer customers to appropriate sources of money guidance or debt advice
• show forbearance
• use third party debt collector and/or sell debts to debt purchase companies

You may have various documents related to these activities. You should provide them all to your case officer to assess them.

We need to be able to determine how a member of your staff would actually carry out these functions.

If in doubt, send us the information and we'll determine if we need it or not.

If you plan to enter into credit or hire agreements with consumers, you should provide copies of the agreements you plan to use.

Your firm will need to show:

• how its QA framework will adequately monitor the operational and conduct risks it's exposed to
• that it can identify shortcomings, take appropriate action to make continuous improvement and address identified weaknesses
• that QA checks are focused on the fair treatment of customers and achieving good customer outcomes

We therefore expect your QA framework to include:

• what checks will be carried out
• by whom
• how often
• what the checks will include
• the expected standards
• criteria for what constitutes a breach in standards
• a clear plan for any remedial actions

This policy should set out:

• what conflicts of interest your firm is subject to
• how these will be managed, both between the firm, the consumer and the distributor

Your chart needs to show:

• how your company is organised
• the group and ownership structure (where applicable)
• all your close links

You'll need to show that the people running your business are competent and capable. To understand what this means in practice, read the FIT chapter[-93] in our Handbook.

For each candidate for whom you're applying to perform a senior management function[-92], you must:

• provide a CV with a detailed work history, that clearly demonstrates that the individual has the knowledge and skills to carry out their role
• obtain a criminal records check[-91]

These policies should show:

• how you'll recruit the right people
• how you'll ensure that your recruits are adequately trained
• that your remuneration (pay and bonuses) drive the right behaviours

If you intend to act as a principal and have appointed representatives (ARs), you must provide details of how you'll:

• onboard and monitor your AR(s)
• comply with our rules

Find out more about principals and ARs[-90].

Product design process and policy

This should include your objectives for wanting to provide the product, your design process and the internal approval process.

Market research report

This should include the full market research you've undertaken to develop your firm’s products and services, and your intended target market.

Distribution channels and due diligence procedures

Please clearly set out what distribution channels your firm will use and how.

If you're using intermediaries, make sure you:

• provide the names of the firms on your firms panel
• demonstrate how you'll ensure that intermediaries are appropriately qualified, fit and proper, and authorised or registered to provide advice both at point you become authorised and on an ongoing basis

Marketing strategy

Please provide information on your firms marketing strategy and how this aligns with your target market and the firm’s products and services.

Customers need to understand the products and services you sell. Your promotions should enable them to do this and should ensure that everything you say is clear, fair and not misleading. Please provide copies of these as well as information on the channels your firm will use.

You'll also need to show how your financial promotions, and communications more generally, tell the customer:

• who they're dealing with
• whether your firm is a lender and not a broker
• whether your firm works exclusively with one or more brokers

Advice and direct sales process

This is only applicable where advice and direct sales take place.

This process should include:

• how the advice process works at your firm across the customer journey
• the procedures/guidelines advisors use
• how your firm will have oversight of advisors and the Quality Assurance (QA) processes

Experience, competence and qualifications of those who provide advice

This is only applicable where advice and direct sales take place.

This document should include details of the experience of your advice staff, showing how they're competent and that they have appropriate qualifications.

Responsible lending policy

Set out how your firm's lending practices will comply with the rules[-89] in our Handbook.

You'll need to explain how you'll assess a customer's ability to repay a mortgage loan.

Lending criteria policy

Explain what factors you'll use to determine whether your firm will approve a mortgage, including the specific criteria for assessing a consumer's financial position and income.

You'll need to consider the Financial Policy Committee guidelines on loan-to-income (LTI)  flow limit.

Procedures for assessing affordability

Again, this policy should comply with the rules[42] in our Handbook. It should clearly explain how your firm assesses a customer's income and expenditure, and then how this is stress tested to determine affordability.

Underwriting mandate organogram

This policy should be detailed enough to minimise inconsistent interpretation and application by staff at your firm.

Make sure you:

• include underwriter mandates by staff grades and experience, and the amount that can be approved by each grade
• also set out at which level a loan application needs to be escalated upwards for a decision

Exceptions policy

This should cover how a lender deals with applications that fall outside of the normal lending criteria.

There should be enough information so that underwriters:

• clearly understand what areas of the lending policy are open to exceptions, as well as the process for approvals
• don't have much room for their own interpretation

Execution-only policy

This will apply if you plan to offer direct-to-customer mortgages without advice.

Your policy should set out the circumstances under which your firm will and won't undertake execution-only sales. This includes the processes your firm will follow in practice for non-advised sales.

Tariff of fees and charges

Your fees and charges should be clear, understandable and reasonable, justifying why your firm deems its fees and charges to be fair value.

Example European Standardised Information Sheet (ESIS)

Your ESIS document should be pre-populated in the same way as a customer would see it so that we can assess the quality of information that your customers will receive.

The document should fully reflect all product details, fees, charges and restrictions, and disclose the key risks and features.

Example offer document

This should be pre-populated in the same way as a customer would see it. It should mirror the ESIS as well as any other information that your firm thinks would be helpful to a customer to enable them to make an informed decision.

Product terms and conditions

These should align with the product and services as specified in your firm’s business plan.

The terms and conditions shouldn't be unfairly stacked in the firm's favour and appear unreasonable. They should also fully explain all implications to the customer.

This policy must comply with the rules[-88] in our Handbook.

It should:

• set out how arrears and repossessions will work at your firm
• show how customers will receive a range of flexible options to help them find a mutually agreeable solution that helps the customer rehabilitate their debt and regain financial stability
• include a reasonable opportunity for the customer to repay their debts without being subject to undue, excessive or otherwise unfair use of collections/recovery activity

Redemption process

This should include:

• the criteria for borrowers to redeem the mortgage
• details of any early repayment charges
• an explanation of how customers will understand the redemption process

This should demonstrate that:

• you'll carry out reasonable and reliable assessments of your customers' personal and financial circumstances (including any reasonably foreseeable changes)
• the advice you'll give and the action you'll take on behalf of a customer will be:
  • based on fully assessing their personal, financial and wider circumstances
  • tailored to their individual circumstances
  • in their best interests
• if you plan to use the Standard Financial Statement (SFS), you're able to apply its methodology correctly and adhere to its principles (eg of fixed and flexible costs, priority and non-priority debts and spending (and saving) guidelines)
• you can clearly, and without bias, explain which of the available debt solutions you've identified as suitable for the customer and ultimately which debt solution you recommend the customer takes
• you're able to deal effectively with insistent customers (those who choose not to enter into the debt solution you recommend)
• you can provide all the advice given in a durable medium along with the other information detailed in CONC 8.3.4(R)[-87] of our Handbook
• where appropriate, which other firms or websites your firm signposts customers to, whether for debt solutions or for information on budgeting tools or income maximisation
• you can identify and manage any conflicts of interest your advice process creates (eg if you receive higher referral fees for one debt solution than any other)

We'll need to see details of the fees and charges your customers will have to pay.

You must ensure that your:

• products and services represent fair value to the customer
• customers can understand the fees and charges they might have to pay
• fees and charges cannot have the effect that the customer pays all, or substantially all, of those fees in priority of repayments to lenders in any given month

Your policies and processes should explain how you'll ensure the advice you give and the action you take will continue to be:

• based on a sufficiently full assessment of the customer’s circumstances
• tailored to the customer’s individual circumstances
• in the customer’s best interest

Typically, we expect firms to demonstrate this by:

• ensuring they maintain contact with their customers and regularly review their circumstances
• monitoring cases for signs that debt solutions may no longer be suitable
• taking action if a macro-economic event occurs (eg the cost of living increases)
• terminating debt solutions in circumstances where the firm can no longer satisfy itself that the action they're taking (eg distributing payments in a debt management plan (DMP)) continues to be a good outcome for the customer

Your firm must meet its prudential resource requirement as described in CONC 10[-86] of our Handbook (prudential rules for debt management firms).

If you plan to hold and/or control client money, you’ll have to show that you can properly protect it.

Your supporting material should therefore include:

• your client account acknowledgement letter
• your Client Assets (CASS) policy
• your CASS resolution pack
• your reconciliation procedures
• details about the person that will be assigned the Prescribed Responsibility ‘z’ (PR-z) for oversight of CASS
  • we expect their competence in CASS to be commensurate with the highest level of client assets that your firm projects it will hold in the first year of authorisation, ie the CASS firm classification
  • remember to clearly state this classification in your application, providing evidence to demonstrate that you also meet the relevant prudential standard

This should be appropriate to the customers you plan to target and the debt advice and/or debt solutions you aim to provide.

In particular it should:

• clearly explain the channels you'll use to market your services (eg social media, radio or TV, pay-per-click)
• demonstrate that you can create, approve and amend financial promotions that customers can understand and use to make informed choices
• set out how you'll test whether your marketing strategy is working as you intended it to, and what you'll do if it isn’t

When determining appropriate forbearance with customers, you must assess their individual circumstances.

Your supporting material should include policies and procedures that show how you'll carry out these assessments.

We expect these materials to include details of:

• the information you'll gather about a customer's personal and financial circumstances, as well as any reasonably foreseeable changes they might experience
• how you'll use this information to determine the tailored support you'll provide
• how the support will be communicated to the customer so that they understand:
  • what's required of them
  • how they can get further support if they need it
  • what will happen if they don't make repayments
• the debt advice, money guidance and income maximisation resources (eg websites, referrals and signposting arrangements) you'll use to ensure customers can find the right help at the right time

These policies should demonstrate that customers won't be subject to undue, excessive or otherwise unfair use of collections and recovery activity.

We expect to see debt collectors and debt purchase companies ensure that customers are treated with forbearance and due consideration, and that they're offered support that's tailored to their circumstances.

Here are some examples of the actions your policies might include:

• suspending, waiving, reducing or cancelling interest and other charges to ensure debts don't rise despite the customer’s repayment
• accepting no or token payments (eg £1 per month) from customers who are struggling to repay other debts or meet priority expenses
• agreeing a repayment arrangement so the customer can repay what is owed over a reasonable timeframe

This list isn't exhaustive. We suggest you also read CONC 7.3[-85] in our Handbook.

This policy and associated procedures will need to set out:

• how your firm’s processes ensure customers aren't pursued for debts they dispute
• where a debt is disputed, how your firm resolves it (in line with CONC 7[-84] in our Handbook) so that it doesn't place the onus on customers to prove that they're not the debtor or that the outstanding debt is not accurate
• that customers won't be subject to harassment through continued collections or recoveries action when they dispute debts

This policy will need to set out:

• how you'll identify limitation periods (accounting for different jurisdictions) and decide what actions to take
• when and how customers are made aware of the relevant CONC rules[-83] in our Handbook (where it's appropriate to do so)
• how you'll ensure, and evidence, that customers aren't threatened with court action when a debt is statute barred
• a clearly documented procedure for dealing with instances where payments made in error toward extinguished debts are returned without delay

This policy will need to set out how:

• you'll ensure enforcement and litigation is only used as a last resort, and, in particular, that this doesn't begin when a forbearance arrangement is in place and the customer is meeting the terms of that arrangement
• communications to customers enable them to understand and engage with litigation and enforcement processes
• communications will be made in a timely way, and how they'll allow customers to make an informed decision and have the opportunity to resolve the matter without the need to start court proceedings
• customers can expect your firm to act in a reasonable and proportionate manner
• your front-line systems and controls (eg post-sale operational controls) are effective at identifying a customer’s propensity to repay debts, before entering a claim