Does FCA regulation cover all instalment loans?

Most instalment loans offered to UK consumers are regulated credit agreements, so the lender usually needs FCA authorisation and must follow FCA rules. Some types of credit are exempt or have different rules, so check the firm's permissions on the FCA register before you borrow. If a firm is not authorised for the credit it is offering, your usual protections may not apply.

What must a lender check before approving an instalment loan?

The lender must carry out a reasonable creditworthiness assessment. This should look at your income, essential spending, existing debts, and whether the repayments are affordable for you. A simple credit score check is not enough on its own.

Can I complain to the Financial Ombudsman about an instalment loan?

You normally need to complain to the lender first and give it a chance to respond. If you remain unhappy, you can ask the Financial Ombudsman Service to review the complaint, provided the firm is authorised and the complaint is within the applicable time limits. The service is free for consumers.

What are my rights if I want to repay an instalment loan early?

You generally have a statutory right to repay early under the Consumer Credit Act 1974. The lender may be allowed to charge a limited early settlement amount if the agreement provides for it. Ask the lender for a settlement figure in writing before you pay.

What if a lender was not authorised by the FCA?

If a lender should have been authorised but was not, it may be acting illegally. You may still owe money under the agreement, but your access to complaints and compensation schemes can be limited. Report the firm to the FCA and seek free debt advice quickly.

How do I check if a lender is authorised?

Use the FCA register to check the firm's name, permissions, and contact details. Do not rely only on a link or phone number sent by the lender or a broker. If the details do not match, treat the offer as a warning sign and do not pay any upfront fee.

FCA Regulation and Your Rights: UK Instalment Loans

FCA regulation and your rights are connected through rules that require authorised lenders to treat you fairly, check affordability, and provide clear pre-contract information. If a lender breaches those rules, you can complain to the firm, escalate to the Financial Ombudsman Service, and rely on statutory protections such as sections 77, 94 and 140A of the Consumer Credit Act 1974.

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WARNING: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk

What FCA regulation means for instalment loans

The Financial Conduct Authority, or FCA, is the UK regulator for consumer credit, including most instalment loans. Firms that lend to consumers usually need authorisation, and they must follow the FCA's rules and principles in the Consumer Credit sourcebook (CONC). This matters because regulation is not just a badge: it shapes what a lender can say, what it must check, and how it must treat you if you fall behind.

When you borrow, you are entering a regulated credit agreement. The lender must provide clear information so you can understand the cost and risks. It must also assess whether the loan is affordable for you, not just whether you are likely to repay. The FCA expects firms to act with integrity and pay due regard to customers' interests. If a firm ignores those duties, you have routes to complain and, in some cases, statutory remedies.

Regulation also covers how loans are advertised. Promotions must be fair, clear and not misleading, and important information cannot be hidden. For a practical overview of affordability checks, see our guide to how lenders assess affordability.

Key obligations before you sign

Before you sign, the lender must give you pre-contract information that sets out the key features of the agreement. Under the Consumer Credit Act 1974 and FCA rules, this includes the amount of credit, the repayment schedule, the total amount payable, the APR, and any fees or charges. The Consumer Credit Act 1974 and the FCA's CONC rules set the framework for these disclosures.

A lender also has to carry out a creditworthiness assessment. This is more than a credit score check. The firm should consider your income, regular commitments, and the effect the repayments will have on your budget. The FCA's rules on creditworthiness are in CONC 5A. If a lender does not make a reasonable assessment, that can be a basis for a complaint.

You should receive a copy of the agreement and be able to see the terms before you are bound. If anything is unclear, ask for an explanation in writing. Do not rely on a verbal summary. Keep the pre-contract information and agreement in a safe place.

Your rights during the loan term

Once the loan is running, you have ongoing rights. The lender must apply payments correctly, provide statements when required, and give notice before certain changes. If you ask for information about your account, the Consumer Credit Act allows you to request a statement of account from the creditor under section 77 of the Consumer Credit Act 1974. The lender must respond in line with that statutory duty.

You can usually repay early, although the lender may be entitled to a limited early settlement charge if the agreement allows it. The rules on early settlement are set out in the Consumer Credit (Early Settlement) Regulations 2004. See our page on early repayment of a loan for a plain-English overview.

If you miss a payment, the lender should treat you fairly and not pressurise you unfairly. It should explain the consequences and consider forbearance where appropriate. Our guide to what happens if you miss a payment explains the practical steps.

How to check a lender is authorised

Before borrowing, check the firm on the FCA register. The register shows whether a firm is authorised and what permissions it has. If a firm is not authorised, it may be operating illegally, and you may not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.

Be careful with copycat websites. Scammers may use a real firm's details or a similar name. Check the contact details on the register independently, rather than using the link in an unsolicited message. The FCA's consumer pages explain how to avoid unauthorised firms. For more warning signs, read our guide to how to spot a loan scam.

If you deal with an unauthorised lender, you may still owe money under a credit agreement, but your protections are different. Get advice quickly if you are unsure. You can also report the firm to the FCA.

Complaints and the Financial Ombudsman Service

If you are unhappy with a lender's conduct, complain to the firm first. Its complaints process should be clear, and you should keep a record of what you sent and when. Many complaints about instalment loans involve affordability checks, misrepresented costs, or the way a lender handled arrears.

If the firm does not resolve your complaint, you may be able to take it to the Financial Ombudsman Service. The service is free for consumers and can look at complaints about authorised firms. Its how to complain page explains the process. Our guide to complaining to the Financial Ombudsman covers what to prepare.

The ombudsman decides cases on what is fair and reasonable in the circumstances. It can require a firm to put things right, including correcting records or paying compensation where appropriate. You do not need a lawyer to complain.

Statutory rights in the Consumer Credit Act 1974

The Consumer Credit Act 1974 gives borrowers specific legal rights. One important provision is section 94, which deals with the borrower's right to repay early. Another is section 140A, which allows a court to consider whether the relationship between the creditor and debtor is unfair. If it is, the court can make an order to remedy the unfairness.

These rights sit alongside FCA rules. For example, a lender's failure to comply with information requirements can affect its ability to enforce an agreement without a court order. The exact effect depends on the breach and the agreement. Because the law is detailed, it is sensible to get free advice before relying on a specific provision.

You can read the full Consumer Credit Act 1974 on the legislation website. For complaints, explain which rule or statutory duty you believe was breached and why. That makes it easier for the firm and the ombudsman to understand your case.

Step-by-step: using your rights in practice

If you think a lender has treated you unfairly, a structured approach helps:

Gather the paperwork. Collect the credit agreement, pre-contract information, statements, and any letters or emails. Note what was said and when.
Write to the lender. Set out the problem, what you want, and the dates involved. Ask for a final response if the firm cannot resolve it.
Check affordability. If the loan was unaffordable from the start, explain your income and commitments at the time. The lender should have assessed these under CONC 5A.
Escalate to the ombudsman. If you are unhappy with the final response, contact the Financial Ombudsman Service within the applicable time limits.
Get free debt advice. If repayments are unmanageable, speak to a free service before borrowing more. GOV.UK options for dealing with your debts lists routes, and StepChange provides free debt advice.

Keep copies of everything. If you need to pause payments while a complaint is investigated, ask the lender what it can do and get any agreement in writing. Do not ignore arrears letters, even if you are disputing the debt.

Where to get support

Free and impartial help is available. GOV.UK debt advice points to charities and organisations that can help. Citizens Advice offers debt and money guidance, and National Debtline provides free telephone and online advice. These services do not lend money and can discuss options without pressure.

If you are considering a debt solution, understand the effect on your credit file and any long-term consequences. The Insolvency Service provides information on insolvency options in England and Wales. MoneyHelper, provided by the Money and Pensions Service, also offers guidance through the Money and Pensions Service.

For credit file questions, you can request a statutory report from Experian or Equifax. Checking your file helps you spot errors or fraudulent activity. Our guide to how to check your credit file explains more.