In the dynamic landscape of consumer credit, credit brokers play a vital role in connecting consumers with lenders. However, this position comes with significant regulatory responsibilities. As the Financial Conduct Authority (FCA) continues to tighten its expectations around transparency, affordability, and consumer protection, credit broking firms must ensure they are consistently operating within the bounds of compliance.
Understanding Your Obligations
Credit broking is a regulated activity under the Financial Services and Markets Act 2000 (FSMA). Brokers must be authorised by the FCA and adhere to the relevant provisions of the Consumer Credit Sourcebook (CONC). This includes clear disclosure of your role as a broker—not a lender—and any fees charged to customers. Failure to do so can result in enforcement action, reputational damage, and financial penalties.
Fair Treatment of Customers
The FCA’s Consumer Duty, which came into force in 2023, has raised the bar for how firms serve their customers. Brokers must demonstrate they are acting in good faith, avoiding foreseeable harm, and supporting customers in making informed decisions. This includes providing clear, jargon-free information and ensuring product suitability based on the customer’s individual needs and financial situation.
Affordability and Creditworthiness
Credit brokers should conduct robust creditworthiness assessments before recommending products. Brokers must ensure that the products they promote are appropriate for the consumer’s financial circumstances. Overlooking this can contribute to consumer detriment and regulatory scrutiny.
Third-Party Oversight
Many brokers work with third-party lead generators or affiliate networks. It’s essential to have oversight of these relationships. The FCA expects firms to carry out due diligence and monitor third-party communications to ensure they align with regulatory expectations, particularly regarding marketing practices and data consent.
Record Keeping and Audit Trails
Maintaining thorough records is not just good practice—it’s a compliance necessity. Records of customer interactions, affordability assessments, and disclosures provide critical evidence in the event of an FCA review or complaint investigation.
Compliance is not a one-off exercise, but an ongoing commitment. As regulatory expectations evolve, credit brokers must be proactive, regularly reviewing policies, training staff, and ensuring alignment with FCA guidance. Here at Consumer Credit Compliance, we work with our network by embedding a strong compliant and customer centric culture, which not only reduce risk but also build trust with consumers—an essential ingredient in today’s competitive credit market.
