What is a credit broker?

A credit broker introduces borrowers to lenders. They do not lend money themselves. Their role is to understand what a borrower needs, identify lenders likely to approve the application on good terms, and guide the borrower through it. Credit broking is a regulated activity, and brokers must be authorised by the Financial Conduct Authority.

What a credit broker does

Understanding your needs

A broker starts with your financial situation - credit history, income, how much you want to borrow, and what the borrowing is for.

Navigating the market

The lending market is large and the terms move. Brokers track current offers, interest rates and lender requirements, which saves the borrower doing that work.

Finding a match

On the basis of what they learn, brokers identify the lenders most likely to approve the application and offer competitive terms.

Helping with the application

Brokers guide borrowers through the process, checking that paperwork is complete and correctly submitted, which avoids the delays that come from errors.

Negotiating and advising

Industry relationships sometimes allow a broker to negotiate better terms. They can also advise on improving a credit profile for future applications.

Why FCA regulation matters

Credit broking is regulated, and the requirements sit in CONC (opens handbook.fca.org.uk in a new tab) of the FCA Handbook. The scope of the activity is defined in the FCA’s Perimeter Guidance (opens handbook.fca.org.uk in a new tab).

Regulation requires brokers to be transparent about their services and fees, to act in the customer’s interests, and to provide accurate information. It includes protections against unfair practices, and it means brokers are accountable to a regulator rather than only to their commercial partners.

For a borrower, choosing an FCA-authorised broker is a check that can be made in a few seconds on the FCA Register, and it is worth making.

What to check before using a broker

Fees. Some brokers charge for their services, upfront or by commission. Establish what the fees are before you start.

Authorisation. Confirm the broker is FCA-authorised. This is the check that gives the rest of the protections meaning.

Transparency. A broker should be clear about their process, their fees and the lenders they work with. Vagueness on any of the three is a warning sign.

If you are becoming a credit broker

Introducing customers to lenders makes you a credit broker whether or not you handle money, and whether or not you receive commission. If finance is a secondary activity alongside your main business, limited permission may be the right route - our guide on full and limited permissions covers the distinction.