Here we list some typical misconceptions about the way we authorise credit brokers. Then we give you the facts.
✘ A firm that brokers only exempt agreements doesn’t need a credit broking permission.
✔ Credit broking is only relevant in relation to loans classed as credit agreements, which are loans to individuals and partnerships consisting of two or three persons. It does not include, for example, loans to companies, which are exempt.
Our regulation of credit broking includes regulating the broking of some credit agreements which may be exempt from regulation. For example, business loans above £25,000.
✘ A firm that only makes introductions to brokers (rather than lenders) does not require a credit broking permission.
✔ Any introductions you make to other credit brokers will be classed as a regulated activity, if the aim is to introduce customers to credit. So, you’ll need FCA authorisation.
✘ Credit broking permission is not required if a firm’s broking is ancillary to its main business.
✔ Retailers using third-party lenders to arrange finance are still likely to be engaged in credit broking – assuming the instalment credit exemption doesn’t apply.
✘ A person who carries on credit broking as an ancillary activity is automatically eligible for limited permission.
✔ You may be eligible for limited permission if your broking relates to the goods and services sold by your firm, and your main business doesn’t involve a regulated activity other than the regulated activity of entering into, or exercising the owner’s rights under a consumer hire agreement. Firms that broker consumer hire and hire-purchase agreements are also eligible for limited permission but domestic premises suppliers aren’t eligible for limited permission broking.
✘ A firm is only a domestic premises supplier if they make sales in the home.
✔ The definition of a domestic premises supplier includes firms who offer to sell goods or services when visiting customers in their homes. This is the case even when a contract is only completed online or in an office at a later date. Providing a binding quotation is one example of an offer – whether the customer chooses to accept it or not.
✘ A firm is only a domestic premises supplier if they discuss credit in the home.
✔ The definition of a domestic premises supplier covers the practice of selling, offering or agreeing to sell goods, as well as offering or contracting to supply services. You’re likely to be classed as a domestic premises supplier if you conduct such activity in the homes of your customers. A credit broker that is a domestic premises supplier is not eligible for limited permission broking.
More information
- See our Handbook to understand what we mean by a ‘credit agreement’
- For the 6 regulated activities which fall within credit broking, take a look at PERG 2.7.7E
- Find out what we mean by credit broking ‘by way of business’