Do car dealers offering finance need FCA authorisation?

Introducing customers to a lender, or presenting or offering a finance agreement, can be credit broking under RAO Art.36A, which usually needs FCA authorisation or appointed representative status. Dealers that supply the vehicles they sell and for whom finance is secondary may qualify for limited permission. Whether you do depends on your revenue mix and what you actually do.

Yes, in principle. An appointed representative can carry on regulated activity such as credit broking under an authorised principal's permission, if the principal has accepted responsibility for it in writing. The principal remains responsible, so it will set rules about what you may do and say.

Limited permission is a lighter route for secondary credit brokers. The FCA says firms must be able to show that introductions would not happen without the main business and that most revenue comes from the main business, otherwise full permission is needed.

Dealers that supply the vehicles they sell may qualify for limited permission as a secondary credit broker. If finance is more than a side line, or you do more than introduce, full permission is likely. It can change depending on the answers to questions such as: Is selling vehicles your main business, with most of your revenue coming from vehicle sales rather than finance? Do customers ever repay you directly, for example through instalments, deposit-and-weekly-payment plans or buy-here-pay-here? Do you sell GAP insurance, warranties or other insurance alongside the vehicle? Do you already operate under an authorised firm, such as a finance broker network, that takes responsibility for your finance introductions?

Start with: Credit broking: the activity definition; Perimeter guidance on credit broking (PERG 2.7); FCA guidance for motor dealers; Conduct rules for credit brokers. This is an initial view from published FCA material, not an FCA determination.

Map exactly how customers are introduced to lenders and who pays whom. Check the FCA's motor dealer and secondary credit broker guidance against your revenue mix. Compare limited permission, full permission and appointed representative status. Review financial promotions and pre-contract disclosure, including commission, before you introduce customers.