Q&As

If an individual lends a sum of money (£40,000) to a friend to assist in the purchase of a property and there is no written agreement in respect of that loan, would the loan be caught by the CCA and would the individual lending the money need to be FCA approved?

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Produced in partnership with Russell Kelsall LLB (Hull); LPC (Shef) of TLT
Published on LexisPSL on 12/11/2019

The following Financial Services Q&A produced in partnership with Russell Kelsall LLB (Hull); LPC (Shef) of TLT provides comprehensive and up to date legal information covering:

  • If an individual lends a sum of money (£40,000) to a friend to assist in the purchase of a property and there is no written agreement in respect of that loan, would the loan be caught by the CCA and would the individual lending the money need to be FCA approved?
  • What is the regulatory regime under the Financial Services and Markets Act 2000 (FSMA 2000)
  • What is a regulated credit agreement?
  • What issues should the lender consider?
  • Is ‘credit’ being provided?
  • Could the loan be an ‘exempt agreement’?
  • If there is a regulated credit agreement, does the lender need authorisation from the FCA to enter into the agreement?
  • If there is a regulated credit agreement, does the lender need to comply with the form and documentation requirements under the CCA?

If an individual lends a sum of money (£40,000) to a friend to assist in the purchase of a property and there is no written agreement in respect of that loan, would the loan be caught by the CCA and would the individual lending the money need to be FCA approved?

What is the regulatory regime under the Financial Services and Markets Act 2000 (FSMA 2000)

Under section 19 of the Financial Services and Markets Act 2000 (FSMA 2000), a person cannot carry out a regulated activity, or purport to do so, in the UK, unless they are either an authorised person (ie authorised by the Prudential Regulation Authority and/or the Financial Conduct Authority), or an exempt person (eg by being an appointed representative). For an overview of the regulated activities regime in the UK, see Practice Note: What are regulated activities?

Activities are regulated if they are of a ‘specified kind’ (ie specified by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO 2001), SI 2001/544) which is carried on by way of business. For more information about what it means to carry on a regulated activity by way of business in the UK, see Practice Notes: What does 'by way of business' mean? and Territorial scope of the general prohibition.

What is a regulated credit agreement?

A regulated credit agreement is an agreement under which a person (called the

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