Bite-size: FCA publishes new guide for credit brokers
Two-page practical guide for smaller firms, with a clear focus on Consumer Duty, financial promotions, complaints and governance
The FCA has published a new regulatory guide for credit brokers, a pilot publication aimed primarily at smaller credit broking firms with fewer than ten employees. The guide is relevant to both limited and full permission credit brokers, as well as appointed representatives (ARs) and introducer appointed representatives (IARs) operating under a principal firm. While it does not introduce any new rules and is not a substitute for the FCA Handbook, it provides a useful summary of the regulator's expectations across key areas including Consumer Duty, financial promotions, customer interactions, complaints handling, governance, regulatory reporting and appointed representative oversight. The full FCA guide can be accessed here.
A clear message running throughout the guide is that firms do not need complex compliance frameworks to meet FCA expectations. Instead, the FCA highlights the importance of clear ownership, proportionate governance, effective training, robust oversight and good customer outcomes. The publication also serves as a reminder that firms remain responsible for demonstrating compliance, maintaining appropriate records and engaging openly with the regulator. For principal firms, the sections covering appointed representatives are particularly noteworthy given the FCA's continued focus on AR oversight and the potential for further changes as part of the wider SM&CR review.
Taken together, the guide provides a useful indication of where the FCA expects firms to focus their attention and what good looks like in practice. Below we have pulled out some of the key points from each section of the guidance to help firms focus on the areas that matter most.
Section 1 - The basics: principles, the Consumer Duty and the broker as manufacturer
The guide opens by setting out the FCA’s core principles and reminds firms that Consumer Duty now runs through every part of a broker’s business. While much of this will feel familiar, one point stands out as a major shift in regulatory thinking - the FCA is now expressly treating credit brokers as manufacturers of their own broking service.
This is a significant development. It means brokers are not simply introducing customers to lenders. They are now expected to think about the design, value and suitability of the service they themselves provide.
Key points include:
acting with integrity and not recommending unsuitable credit
exercising skill, care and diligence in customer interactions
having clear management, accountability and oversight arrangements
helping customers make informed decisions without pressure
acting in good faith and avoiding foreseeable harm
supporting customers to pursue their financial objectives
engaging openly with the FCA and reporting issues where required
Brokers as manufacturers - what this means
The FCA makes clear that brokers are:
distributors of the lender’s product
manufacturers of their own broking service
This is important because it creates additional Consumer Duty responsibilities.
In practice, brokers should now be thinking about:
whether their broking fees represent fair value
whether commission arrangements affect impartiality or customer outcomes
whether their service has a clearly defined target market
whether the lenders and products they distribute align with that target market
whether they can evidence regular fair value assessments
whether complaints, cancellations, voluntary terminations and customer feedback are being used to monitor outcomes
whether their annual Consumer Duty Board Report properly captures all of this
For many brokers, this may require a change in mindset. Consumer Duty is no longer just about the lender’s product. It now applies directly to the design, delivery and value of the broker’s own service.
Section 2 - Promoting the business
The FCA makes clear that the same standards apply across all channels, whether firms are promoting in person, online or through social media.
Key points include:
promotions must be clear, fair and not misleading
wording should be accurate, balanced and easy to understand
firms must clearly state they are acting as a credit broker and not a lender
AR status must be made clear where relevant
high-cost short-term credit promotions must include the required warning
firms must not suggest or imply that the FCA has approved or endorsed an advert
Section 3 - Dealing with customers
This section focuses on how firms engage with customers and the need for proportionate but effective affordability and suitability checks.
Key points include:
understanding customers’ needs, circumstances, income and expenditure
considering affordability and the risk of foreseeable harm
using lender tools proportionately where appropriate
clearly explaining key product features and repayment consequences
setting out broker fees in writing before agreements start
disclosing commission where it may affect impartiality or customer decisions
understanding refund obligations where broker fees are charged but no agreement follows
Section 4 - The right people in the right roles
The guide reinforces that even smaller firms must have the right governance structure and clear accountability.
Key points include:
understanding whether the firm falls under core or limited scope SM&CR
ensuring Senior Managers are approved before carrying out their roles
maintaining Statements of Responsibilities
allocating prescribed responsibilities where required
training staff on the Conduct Rules
notifying the FCA of reportable breaches
carrying out fit and proper assessments covering honesty, competence and financial soundness
Section 5 - Checks, systems and controls
The FCA accepts that smaller firms do not need large compliance teams, but they do need clear controls and oversight.
Key points include:
appointing a named person responsible for compliance oversight
maintaining clear written policies and procedures
carrying out routine checks and monitoring
managing key risks such as mis-selling and poor AR oversight
maintaining secure and accessible records
having a written conflicts of interest policy
overseeing outsourced activities and understanding where risks sit
Section 6 - Handling complaints
Complaints handling remains a major FCA focus and firms are expected to treat this as part of their wider customer outcomes framework.
Key points include:
making it easy for customers to complain
clearly signposting the Financial Ombudsman Service
acknowledging complaints promptly
investigating complaints fairly and without delay
issuing final responses within eight weeks
identifying repeat or systemic issues through complaints data
keeping complaint records for at least three years
Section 7 - Updating the FCA
The guide reminds firms that regulatory reporting remains a core compliance obligation and must not be overlooked.
Key points include:
understanding which regulatory returns apply to your permissions
keeping reporting accurate and on time
notifying the FCA of significant events or issues
reporting material breaches and customer harm risks
notifying changes to controllers or close links
completing annual firm attestations through My FCA
Section 8 - How the FCA supervises firms
The FCA describes its supervision model as proportionate, but the guide is a reminder that all firms remain within scope.
Key points include:
responding openly and constructively to FCA contact
being prepared for thematic reviews and supervisory calls
understanding the FCA may review business models and governance
recognising that restrictions, requirements and redress can be imposed where concerns arise
preparing for possible future changes as ARs move into SM&CR
Section 9 - Appointed representatives
For principal firms, this section is one of the most important and reflects the FCA’s continued focus on AR oversight.
Key points include:
understanding the difference between ARs and IARs
ensuring ARs act within their permitted scope
making clear to customers where activities are regulated or unregulated
carrying out due diligence before appointment
maintaining written AR agreements
completing annual reviews and self-assessments
submitting REP025 returns
notifying the FCA when AR relationships end
We will also be covering the FCA’s new Credit Broker Guide as part of our next Helping Hands session in July, alongside updates on financial promotions reform, Consumer Credit Act reform and motor finance redress. Register here if you would like to join us.
Key takeaway
The guide does not create new obligations, but it provides a useful indication of the areas the FCA expects smaller brokers to focus on. Firms should view it as a practical checklist against their current arrangements and consider whether their policies, controls and customer journeys remain aligned with regulatory expectations.
How Auxillias can help
Auxillias supports lenders, brokers, motor finance firms and appointed representative networks with practical legal, regulatory and compliance support, helping firms review where they stand against current FCA expectations and identify any gaps before they become regulatory issues.
Our team can help firms:
review financial promotions, websites and customer communications
assess Consumer Duty compliance and customer outcomes
review commission disclosure arrangements and customer journeys
strengthen governance, oversight and monitoring frameworks
support appointed representative and principal firm obligations
review complaints handling processes and regulatory reporting arrangements
provide training for boards, senior managers and frontline teams
If you would like to discuss your firm's compliance arrangements or would like an independent review against the FCA's latest guidance, please contact a member of the Auxillias team.
