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8 March 2023

Once you have decided to assist consumers with finding a credit provider or finance as a credit broker, you need to assess what type of authorisation you require. There are two types of credit broking permissions which the Financial Conduct Authority (“FCA”) authorise; “full” or a “limited” permission.

The type of authorisation that you should apply for is determined by the type of activities you carries out.

Limited permission

Whilst deciding whether you require full or limited permission can be convoluted, a starting point is to assess whether effecting introductions between your customers and finance providers is secondary to your main business activity.

Limited permission credit broking is suitable if you are;

  • Effecting an introduction to a credit provider or another credit broker where the sale of goods or non-financial services your main business and broking is an ancillary activity meant to help finance the purchase of those goods or services.
  • Effecting an introduction in relation to consumer hire or hire purchase agreements.

For example, your firm may be a motor dealer, high-street retailers or a merchant of goods and services that introduce customers to a finance provider.  As long as 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.

Limited permission means that your business model presents less risk to customers because it is secondary to the main purpose of your business and regulated activity is conducted to simply introduce your customers to a finance provider for the purpose of obtaining goods or services.

However, a firm that introduces credit providers to customers as a secondary activity on its good and services in a customers home are not eligible for limited permission activity. These firms are known as ‘domestic premises suppliers’.

Full permission

If you don’t fit under the eligibility requirements for limited permission requirement then you will likely require full permission credit broking permissions.

You may need full permission credit broking if you are;

  • Effecting introductions between customers and lenders or other credit brokers as the main purpose of your business.
  • Effecting introductions between customers and lenders or other credit brokers where the sale of goods or services takes place in the customer’s home, known as a ‘domestic premises supplier’.

Domestic premises suppliers

A domestic premises supplier is a firm that offer to sell goods or services when visiting customers in their homes. This is the case even when only a quotation is offered whether or not the customer chooses to accept it whilst a member of your firm if on the customers premises of not.

Deciding to pursue FCA authorisation can feel overwhelming, that’s why our team of professionals are on hand to support you through your regulatory journey. Whether you require limited or full permission credit broking permission, we specialise in supporting credit firms.

By Ian Beardmore

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