The Financial Conduct Authority (FCA) regulates credit broking in the UK to ensure consumer protection and market integrity. If you plan to operate as a credit broker or sometimes also called Finance Broker, obtaining FCA authorisation is a legal requirement. This guide outlines the key steps, requirements, and considerations for securing FCA credit broker authorisation.
What is a Credit Broker?
A credit broker is an individual or firm that introduces consumers to lenders or other credit brokers. This can include:
- Arranging credit agreements
- Referring consumers to lenders
- Helping consumers obtain credit from third parties
Certain activities, such as lending money yourself, fall under different regulatory requirements and require separate authorisation.
Do You Need FCA Credit Broker Authorisation?
Not all credit broking activities require FCA authorisation. You must apply for authorisation if you:
- Introduce consumers to lenders or other brokers
- Advise on credit agreements
- Assist in arranging credit
- Offer credit broking services for a fee or commission
Exemptions may apply if your activities fall within the scope of appointed representative arrangements under an FCA-authorised firm. The FCA has created a page to clear some common misconceptions, available to read here.
Steps to Apply for FCA Credit Broker Authorisation
1. Determine the Right Type of Authorisation
You can apply for either:
- Limited Permission: This is suitable where your credit brokering activity is secondary (e.g. car dealerships or retailers, such as furniture or jewellery shops offering finance options).
- Full Permission: Required if broking is your primary business or if you are debt advising.
2. Prepare the Required Documents
To submit an FCA application, you’ll need the necessary documents. These need to be detailed, and preparing these documents is what we do as part of application support.
Some of the key documents include:
- Business Plan: Clearly outlining your activities, target market, and compliance measures.
- Financial Forecasts: Detailing expected income and expenditure.
- Compliance Policies: Ensuring adherence to FCA regulations, including Consumer Duty, Vulnerable Customers and a few more.
- Fit and Proper Test Information: Demonstrating that senior managers and directors are suitable to run a regulated firm.
3. Submit Your Application via Connect
All applications must be submitted through the FCA’s online platform, Connect. Be prepared to:
- Pay the relevant application fee (ranging from £500 to £2,500, depending on firm type, permissions and size)
- Provide detailed information about your firm and its key personnel
- Supply supporting documents as requested by the FCA
We also help you through the online submission, taking the stress out of filling in the right information.
4. Await FCA Review and Respond to Queries
The FCA can typically take 6 months to review applications, although they have a statutory right to take longer. During this period, they may request additional information or clarifications.
We stay with you through the process and help answer questions from the FCA.
5. Comply with Ongoing FCA Requirements
Once authorised, you must:
- Follow FCA rules
- Maintain accurate records and submit regulatory returns
- Ensure staff are trained on compliance requirements
- Keep up to date with FCA regulatory changes
Common Pitfalls to Avoid with FCA Credit Broker Authorisation Application
- Incomplete Applications: Missing information can delay the process.
- Weak Compliance Policies: Failing to demonstrate robust compliance can lead to rejection.
- Unclear Business Model: The FCA needs clear evidence of how you operate and ensure consumer protection.
Get in touch
Securing FCA credit broker authorisation is a crucial step for any business involved in credit broking. By preparing a well-documented application and ensuring ongoing compliance, you can establish a strong, trustworthy business in the financial services sector.
Get in touch today to get your FCA application support.
