If your business introduces consumers to a credit product, you are likely acting as a credit broker and need FCA authorisation. Many retailers, motor dealers, and service providers do not realise they are carrying on credit broking activity.
You are a credit broker if you:
- Introduce customers to a lender or finance provider
- Offer finance at the point of sale (such as "0% finance available")
- Help customers complete credit applications
- Present credit options or compare finance products for customers
- Introduce customers to regulated credit products, except where a specific exemption applies
Operating as a credit broker without FCA permission is a criminal offence. Any credit agreements arranged through an unauthorised broker may be unenforceable.
Full permission vs limited permission
For credit broking, the distinction between full and limited permission depends on the nature of your activity:
| Full permission | Limited permission |
|---|---|
| You actively sell or recommend credit products | You simply introduce customers to a lender |
| You compare or advise on credit options | You present a single lender's products at point of sale |
| Credit broking is a core part of your business model | Credit broking is ancillary to your main business |
| Higher application fee | Lower application fee |
| More extensive application requirements | Simplified application |
Most retailers and motor dealers offering finance through a single provider will qualify for limited permission. If you offer finance from multiple lenders or actively compare products for customers, you are likely to need full permission.
Exemptions from credit broking permission
Check carefully whether an exemption applies before relying on one. The most commonly used exemptions are:
- 12-month interest-free credit with 12 or fewer instalments: If you offer your own interest-free credit (not through a third-party lender) repayable in 12 or fewer instalments within 12 months, this is an exempt credit agreement. You do not need credit broking permission to arrange exempt agreements. However, if a third-party lender provides the credit, the exemption may not apply to your broking activity.
- Not-for-profit organisations: Certain not-for-profit bodies are exempt from credit broking requirements when the activity is carried on in connection with their non-profit purpose.
- Incidental introductions: If you make a one-off, incidental introduction to a lender and receive no payment for doing so, this may fall outside the definition of credit broking. This is narrowly interpreted by the FCA.
BNPL merchants: Broking Deferred Payment Credit agreements is exempt from regulation. The DPC lender, not the merchant making the introduction, must hold the relevant FCA authorisation or an existing temporary permission. Merchants must still comply with any financial-promotion and consumer-protection obligations that apply.
Steps to comply with credit broking rules
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1. Confirm you are carrying on credit broking activity
Review all the ways your business helps customers access credit. This includes point-of-sale finance, referrals to lenders, BNPL integrations, and any arrangement where you introduce consumers to a credit product. If you are unsure, check the FCA's Perimeter Guidance Manual (PERG) Chapter 17.
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2. Check whether an exemption applies
Determine whether your activity falls within a recognised exemption. If you rely on the 12-month interest-free exemption, verify that the credit is provided by you (not a third-party lender), carries no interest or charges, and is repayable in 12 or fewer instalments. Document your exemption analysis.
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3. Apply for FCA permission
If no exemption applies, apply for consumer credit permission via FCA Connect. Choose limited permission if your broking activity is ancillary to your main business and you work with a single lender. Choose full permission if you compare products or actively sell credit. Application fees range from GBP 280 (limited) to GBP 5,000 (full).
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4. Make your initial disclosure
Before doing anything that amounts to credit broking, you must tell the customer that you are acting as a credit broker, not a lender. State the name of the lender or lenders whose products you offer. This disclosure should be in writing or other durable medium.
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5. Set up fee and commission transparency
If you charge customers a fee for arranging credit, disclose the fee amount before providing your service. The GBP 250 fee cap applies to secondary credit brokers. You must also disclose commission arrangements on request, and proactively under the Consumer Duty where commission could influence your recommendation.
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6. Train staff and maintain records
Staff involved in credit broking must understand the products they are offering, the disclosure requirements, and when to refer customers to the lender for further information. Maintain records of disclosures made, complaints received, and any fees charged.
BNPL merchants and Deferred Payment Credit
If your business offers Buy Now Pay Later at checkout through a third-party provider, broking the DPC agreement is exempt from FCA regulation. The BNPL lender entering into the agreement must be FCA-authorised or hold an existing DPC temporary permission.
Merchants should:
- Check the lender's FCA authorisation or temporary-permission status
- Review your BNPL provider agreement to understand each party's responsibilities
- Review how you promote BNPL to customers and comply with applicable financial-promotion rules
See Buy Now Pay Later regulation: what businesses need to know for the full picture of BNPL regulation.
What next
- Already authorised for credit broking? Review your permissions to ensure they cover all the credit products you broker, including BNPL if applicable.
- Need to apply? Start with the FCA's How to apply for authorisation page and prepare your business plan, compliance arrangements, and financial projections.
- Unsure whether you need permission? Contact the FCA's Firm Contact Centre on 0300 500 0597 or check the Perimeter Guidance Manual (PERG).
Legal basis
Primary legislation and key regulations
Official guidance
FCA CONC 2: Credit broking (opens in a new tab)
FCA Consumer Credit sourcebook chapter on credit broking conduct requirements.
FCA
FCA PERG 17: Credit broking (opens in a new tab)
FCA Perimeter Guidance on what constitutes credit broking activity.
FCA
FCA: Consumer credit permissions (opens in a new tab)
FCA overview of consumer credit permission types and application process.
FCA
FCA: How to apply for authorisation (opens in a new tab)
Step-by-step guidance on the FCA authorisation application.
fca.org.uk
Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (opens in a new tab)
Defines regulated credit broking activities.
legislation
Consumer Credit Act 1974 (legislation.gov.uk) (opens in a new tab)
Primary consumer credit legislation.
legislation
How to apply for authorisation or registration | FCA (opens in a new tab)
FCA