FCA Permissions – A Hidden Business Tax for Construction and Agricultural Dealerships?

Just when you thought it couldn’t get worse for UK business owners the UK government has found yet another way to increase the financial burden on businesses—this time through the need for FCA (Financial Conduct Authority) permissions. For construction and agricultural dealerships that offer or even introduce finance options to their customers, acquiring FCA authorisation has become essential. While it might not be labeled as a tax, this regulation comes with significant costs, time-consuming processes, and ongoing obligations, making it another hurdle for dealerships already facing rising operational costs.

The Cost of Compliance

For construction and agricultural dealerships, selling machinery often involves finance options like hire purchase or leasing. However, to offer, discuss or even provide a phone number for a finance specialist, dealerships are now required to apply for FCA authorisation. This involves choosing between Limited or Full Permission, depending on the scope of financial activities. For dealerships that only introduce customers to finance providers, Limited Permission is usually enough, but for those with more extensive financial services, Full Permission is mandatory.

This process isn’t as simple as filling out a form. Dealerships must go through a rigorous application process, which involves submitting detailed financial information, proving compliance with FCA regulations, and, if granted permission, adhering to ongoing reporting requirements and audits. Not only does this introduce additional bureaucracy, but it also comes with costs for legal and compliance services to ensure everything is in order. Added to that the FCA’s regulatory rules are somewhat open to interpretation, this can cause a sizeable amount of stress, cost and most likely staff into a business that will have to shift that cost onto the customer to make it work.

Is FCA Authorisation Another Tax?

While the FCA might frame this as a necessary measure to protect consumers, the reality for businesses feels like yet another stealth tax. The very fact that they repeatedly talk about protecting ‘consumers’ is proof that this is yet another misrepresented tax given that purchasers of any of this kind of equipment will predominantly be business owners and that the definition of a business should not be confined to a Ltd company. Construction and agricultural dealerships that simply wish to offer finance to make sales easier for their customers are now facing the burden of FCA compliance costs—costs that many argue are unnecessary for businesses that aren’t traditional financial institutions nor do they have any interest in being so or the knowledge let alone time to become one.

These dealerships, already squeezed by rising costs of materials, machinery, and transportation, are now forced to spend time and money navigating FCA requirements. It’s easy to see how this might feel like another way for the government to collect revenue without explicitly calling it a tax. After all, failure to comply can lead to hefty fines and penalties, which can severely impact a dealership’s bottom line.

In an industry where margins are already tight, these extra compliance costs could potentially be passed on to the end customer. This makes it more expensive to buy or lease construction and agricultural equipment, further dampening an already challenged sector and hampering the one person that the FCA are supposedly there to protect: the customer.

What Can Dealerships Do?

For dealerships, there are a few ways to navigate these FCA regulations without breaking the bank. You can work with third-party compliance firm to help streamline the authorisation process, but this will still require investment and time or you can use us over here at Find That Asset. We are helping a number of dealerships through our partnership with Hire That Money to provide the authorisation for all our lovely dealers. We handle the time, reporting and stress for you so that you can continue to do your job as you do best.

Our sole purpose at FTA was, has and will always be to support the industries as we navigate the financial future of the UK so get in touch today and one of our experts will be able to help.