Credit Brokers
FCA Authorisation
Expert regulatory support for credit brokers, loan intermediaries, and finance arrangers seeking FCA authorisation for consumer credit activities.
Consumer Credit Regulation
Credit brokers arrange consumer credit agreements, introducing borrowers to lenders for personal loans, vehicle finance, and other credit products.
The Consumer Credit Act and FCA's CONC sourcebook set detailed requirements for responsible lending, affordability assessments, and clear customer communications.
FCA authorisation requires demonstrating appropriate systems for creditworthiness assessments, complaint handling, and treating customers fairly.
Typical Services
- Personal loan broking and arrangement
- Vehicle finance and hire purchase
- Point-of-sale consumer credit
- Credit comparison and lead generation
How We Support Credit Broker Authorisations
- Perimeter mapping of each introduction, referral and lead generation route
- Permission tier assessment against the secondary business test
- Appointed representative versus direct authorisation decision and principal selection
- AR agreement review, particularly termination provisions and activity restrictions
- Commission and conflicts framework design against CONC 2 and CONC 4
- Lender panel due diligence and the affordability responsibility split
- Connect application and regulatory business plan
- Commission disclosure records and remuneration structure documentation
- CONC 3 financial promotions review and approval process
- Affiliate, lead generator and introducer oversight arrangements
- Written allocation of affordability tasks between broker and lender
- Compliance monitoring programme
- FCA query management and responses
- Senior Manager interview preparation
- Perimeter position documented in a form that can be shared if queried
- Limited to full permission variation, gap analysis and implementation plan
- Commission disclosure file review after authorisation
- Ongoing regulatory change monitoring
Key Regulatory Requirements
Consumer Credit Permissions
- Credit broking permission
- Lender panel due diligence
- Commission disclosure
- Fee transparency
Affordability, and Where the Duty Sits
- Creditworthiness duty sits with the lender
- Broker tasks defined in writing
- Information collected to the lender's standard
- Vulnerable customer identification
CONC Compliance
- Pre-contract information
- Adequate explanations
- Clear financial promotions
- Treating customers fairly
Financial Resources
- Base capital: £5,000 (credit brokers)
- Professional Indemnity Insurance
- Financial projections
- Adequate working capital
Required FCA Permissions
Credit broking is one of the few intermediary activities with two authorisation tiers, and the tier turns on how central credit is to your business.
Credit Broking, Full Permission
Required where credit broking is the firm's main business rather than an adjunct to a non-financial trade. Sits in fee block CC2.
- Main business credit broking
- Fee block CC2
- Full Threshold Conditions assessment
- Commission and conflicts framework
Credit Broking, Limited Permission
Available only where the broking is secondary to a main non-financial services business, such as a retailer, motor dealer or professional firm offering fee deferral. Sits in fee block CC1.
- Secondary business test satisfied
- Fee block CC1
- Nature, scale and prominence evidence
- Route to variation if the model grows
The Lending Boundary
Not a broker permission, and the boundary most often crossed by accident. A firm that funds credit from its own balance sheet is a lender and needs full authorisation, whatever its broking permission says.
- Balance sheet funding test
- Full authorisation where lending
- Variation of permission planning
- No lending under limited permission
Credit Information Services
Applies where the firm also helps customers obtain or correct their credit file information alongside introducing them to lenders.
- Scope of the information service
- Customer outcome evidence
- Fee transparency
- Limited permission only where secondary
Debt Adjusting and Debt Counselling
Applies where the firm goes beyond introducing and starts negotiating or varying terms, or advising on the liquidation of debts. Commercial debt adjusting and counselling sit in the full permission tier.
- Boundary between introducing and adjusting
- Advice competence
- Fee transparency
- Full permission where commercial
Permissions & scope
Which regulated activities the firm will carry on, and the exact permissions that follow from them. Everything downstream is scoped to this, so a permission asked for loosely is a business plan and a set of controls built against the wrong thing.
Business model
What the firm does, who for, and how it earns. The FCA tests whether the model is viable and whether the permissions being requested actually match it, rather than reading the two documents separately.
Governance & SM&CR
Who is accountable for what, and whether they are fit and proper for it. Senior manager responsibilities have to be mapped to named people and evidenced, not asserted in a paragraph.
Policies & controls
The procedures that make the model work in practice, and evidence they are followed rather than filed. A policy the firm cannot show operating is the most common gap at the gateway.
Financial resources
Capital, projections and an orderly wind-down. The figures have to agree with the business model rather than sit beside it, and the wind-down plan has to be costed.
Common Authorisation Challenges
The FCA's motor finance review and the Supreme Court ruling on secret commissions have moved credit broking oversight higher up the agenda.
Commission Disclosure and Conflicts of Interest
The FCA's motor finance review found widespread failures in commission disclosure, and the Supreme Court ruling on secret commissions raised the stakes and the redress liabilities further. Brokers must evidence that commission arrangements did not create conflicts of interest, and disclosure records are under particular scrutiny. Credit brokers carry obligations under CONC 4 on pre-contractual disclosure and CONC 2 on remuneration and commission disclosure.
Appropriateness, Not Just Approvability
Brokers who cannot show they assessed whether the credit product was appropriate for the customer, rather than only whether the customer could be approved, are exposed. The FCA has been clear that brokers who introduce customers to unaffordable credit bear regulatory responsibility, particularly where the commission structure rewards volume over suitability.
Getting the Broker and Lender Affordability Split Right
The CONC 5.2A creditworthiness duty falls on the firm entering the agreement as lender, and should not be internally rewritten as a universal broker affordability duty. A broker may collect information or operate part of the lender's process, but allocating operational tasks does not move the lender's responsibility. Applications frequently describe a split that neither party can actually evidence.
Limited Versus Full Permission and the Secondary Business Test
Firms understate the scale of their credit activity to stay in the cheaper tier. The FCA's test is not purely volumetric: it looks at nature, scale, prominence, how the firm presents itself, and whether credit is integral to the offering. A motor dealer deriving 40 per cent of revenue from finance commission is unlikely to be a secondary business broker. Carrying on an activity your permission does not cover puts the firm in breach of its Part 4A permission, and a variation takes months during which the activity cannot continue.
Appointed Representative Arrangements and Principal Oversight
Consumer credit is a sector where the AR model is widely used by brokers introducing to third party lenders, and the FCA has found some principals have inadequate oversight of their broker networks. Its July 2022 Dear CEO letter cited significant levels of harm arising from the activities of appointed representatives. SUP 12 sets the expectations, and the FCA can object to an appointment.
The full principal oversight framework →Whether the Introduction Is Credit Broking At All
Introducing customers to lenders is credit broking, whatever the firm calls it. Labels are irrelevant and substance decides. Firms that believe they are simply passing on referrals may be broking, and the by way of business test is relatively easy to satisfy, so low volumes can still fall inside the perimeter. Lead generators, comparison sites and technology platforms are the recurring cases.
Related Services
Expert support for credit broking firms
FCA Authorisation
Navigate the FCA application process with expert guidance from ex-FCA regulators.
Learn more →Consumer Duty
Meet Consumer Duty requirements with practical frameworks and support.
Learn more →Compliance Outsourcing
Outsource your compliance function to experienced regulatory professionals.
Learn more →Credit Broking Compliance
CONC compliance, AR oversight and ongoing support for credit brokers.
Learn more →Ready to Get Authorised?
Speak with our credit broking regulatory specialists about your permission tier, AR route and FCA application.
Phone: 0330 133 0811
Email: contact@memaconsultants.com