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Credit and collateral operations

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Obtaining a license for mortgage loan operations in 2020

Advantages of obtaining a license for collateral-based lending:

  • A popular type of service offered by a wide range of financial institutions (banks, leasing companies);
  • One of the ways to minimize risks when providing loans;
  • A wide range of jurisdictions where you can order a license for carrying out mortgage loan operations;
  • A relatively simple procedure for preparing the necessary documents.
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Collateral is one of the traditional forms of minimizing credit risks. It is widely used by banks, pawnshops, leasing companies, and provides the insurance to the lender in case of bankruptcy of the borrower. Any person, who plans to engage in a business related to the provision of loans, must obtain a license for loan-collateral operations in Great Britain.

Obtaining a license to provide loans in UK allows you:
  • To accept applications for secured loans;
  • To offer or agree on conditions of a security loan for compensation or benefits;
  • To advertise your services;
  • To become a real estate lender.
The definition of a security loan

A secured loan is a loan, provided to an individual or legal entity secured by a property. Usually, a real estate, securities, vehicles, jewelry, appliances, art objects, etc. are used as a collateral. In case of default by the borrower, the lender has the right to compensate for losses through the sale of collateral.

A proposal or discussion of the conditions of a security loan is determined by the fact, that any of following actions has been completed:

  • To show the borrower (a potential borrower) loan conditions;
  • To communicate with the borrower regarding loan conditions;
  • To refer the borrower to specific lenders;
  • To receive a payment (as a result of the offer) as a result of the borrower entering into a credit relationship with the lender.
Which individuals do not need to obtain a license for loan-mortgage operations in Britain?

Obtaining a license for collateral lending in Great Britain is not required, unless the person will carry out activities to provide loans. Recommendations and requirements regarding who can be licensed vary depending on the particular jurisdiction.

It should be noted, that it is always necessary to contact competent authorities of the jurisdiction in question in order to clarify the details of the requirements for a license for loan and collateral activities.

Next, the procedure for obtaining a loan-mortgage license in UK will be outlined in general terms.

Obtaining a license for credit-collateral activities in Great Britain

Licensing of individuals is controlled by national authorities of the country in question, which are usually called the Commissions or Financial Services Market Regulatory Offices.

The procedure for obtaining a UK license is typical. Required:
  • To register a company in Britain for the proposed activity;
  • To open a British corporate bank account;
  • To contribute an authorized capital;
  • To collect documents and fill out forms for obtaining a UK license;
  • To pay a state fee for considering a license application;
  • To submit documents.
The list of documents for a license for loan and collateral activities usually includes:
  • A copy of passports (for each founder);
  • The confirmation of the address of residence;
  • A detailed business plan;
  • Documents, confirming the presence of a specialized education and a work experience (for founders, directors, accountants, skilled workers);
  • The confirmation of the possibility of settlement of insurance claims;
  • Recommendations from banks and specialized companies;
  • Financial statements (for persons, who already have licenses, issued by the licensor).
General requirements for obtaining a license in Britain

It should be borne in mind, that the company must have an office and premises for storing collateral property, that meet standards and rules of state building standards, sufficiently protected, using the necessary safety equipment. The institution should also have an active website, and notify the licensing authority of any changes to documents, that were submitted along with the license application.

The founders of the company must have an impeccable reputation, and should not have a debt or a criminal record. Professional qualities of directors and accountants must meet professional requirements.

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A person can also be licensed by the fact, that:
  1. In the past, a license has been revoked. The only thing, that can serve in this case is the official cancellation of the license revocation.
  2. The company or its officers were found guilty of any serious crime. This is especially true for cases involving fraud, breach of trust or money laundering.
The period for consideration of an application for a loan and mortgage license is from 4 months.

The cost of the license and state fees, as well as the amount of the authorized capital vary, and are determined by the national licensing authority.

The renewal of a UK license for loan and collateral activities

A person must comply with all minimum standards, established for the initial licensing and undergo all necessary checks, approved by the regulatory body.


A comment

This article is not published for informational purposes only, reflects a conceptual approach to licensing, and is not legal advice. Please note, that regulatory documents, governing the licensing of activities related to the provision of financial services, cover significant volumes,

and should be fully considered at the stage of project preparation, taking into account the commercial considerations of the future licensee.


A final word

If you have any questions, regarding the topic covered in the article, ask for individual advice on obtaining a license in Britain with IQD Consulting. Our specialists are also ready to provide accompanying services at all stages of company registration for financial activities and obtaining a license for credit-collateral activities in United Kingdom of Great Britain. To find out details about our services and sign up for a consultation, please contact us directly at the contacts indicated in the form below.

Our company shall not be liable for any direct, indirect or consequential loss arising from the use of the information and material contained in this website.

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