This article looks at how to go about obtaining a credit broker license.
1. Choosing the correct license
First, you must choose the kind of credit broking you want to provide. Depending on your selection, you will then either require full permission or a limited permission consumer credit license. The process for obtaining the limited permission license is shorter whilst the application fee is much lower. If you are not a car dealer and your main activity will be referring to car finance leads to lenders, then you must apply for the full permission version of the consumer credit license. You must apply to the Financial Conduct Authority and obtain approval for the consumer credit license.
Limited permission credit broking
- credit broking (excluding domestic premises suppliers) where the sale of goods or non-financial services is the main business and broking is a secondary activity designed to help finance the purchase of those goods or services (for example, car dealerships and retailers that introduce customers to a lender)
- credit broking in relation to consumer hire or hire purchase agreements
Full permission credit broking
- credit broking where you introduce customers to lenders or brokers and this is your main business activity
- credit broking where the sale of goods or services takes place in the customer's home (such as boiler installation)
2. Preparing the license application
In your application form you will be required to provide the following information:
- basic company details
- a business plan
- your financial projections
- your revenue model
- details of how you will treat customers fairly
- details of how you will ensure that any financial promotions are fair, clear and not misleading
- details of your systems and controls
- your compliance monitoring plan
- details of your key people
3. How long it takes to obtain your license
You should allow 1-2 months for the limited permission consumer credit license and around 3 months for the full permission license.
4. Managing your business in a compliant manner
Obtaining your consumer credit license will be the start of your journey as a regulated business. Your business will be required to comply with laws and regulations, and you must manage your business in a compliant manner. For example, you must ensure that any financial promotions or marketing material is fair, accurate and not misleading to your customers. Similarly, you must treat your customers fairly.