What is a credit broker FCA?
A credit broker is a person or entity who helps people to find credit by searching through a panel of credit lenders. A credit broker could be providing mortgages(Known as a Mortgage broker), loans (known as a loan broker) or credit cards (known as a credit card broker)
A credit broker will help you source out any of these credit products. It is very likely you have used a credit broker before.
A credit broker will usually have to be FCA regulated except if a firm’s broking is ancillary to its main business.
What’s the difference between a credit broker and a lender?
A credit broker will offer credit products from its lending panel, this may not be products from all the lenders available within the market but simply the lenders which the credit broker has access to.
A lender, on the other hand, is the one who actually originates and gives out credit. A credit broker simply introduces and in some cases assists the applicant in providing the relevant documents required by the lender.
It is important that you always know if you are dealing with a credit broker or a lender. The credit broker should always inform you that they are indeed a credit broker and if you are not sure you should look at the FCAs register and perform a search of the credit brokers name( this could be their trading name or registered company name).
Do credit brokers need to be FCA registered?
Yes, most credit brokers have to be regulated and this means their actions should follow the FCAs guidelines.
Credit brokers are not allowed to just charge you fees or add fees to your loan without your consent.
A credit broker can only charge you a fee is the below conditions are met:
the credit broker has given you a written information notice setting out details of the fees, and
you’ve acknowledged and agreed to the information notice in writing. Agreeing over the telephone isn’t enough.
If a credit broker passes your information to another credit broker then they must also provide you with a separate information notice prior to charging you
The information notice a credit broker gives you must tell you:
who you’re dealing with – by including the credit broker’s legal name
that the firm is a credit broker and not a lender
how much you’ll pay or are likely to have to pay
when and how the fee will be paid.
The only case where this doesn’t occur is when the credit sought is secured on land
If a credit broker charges you fees without your knowledge you can complain to the FCA and if the credit broker doesn’t give you a satisfactory answer within 8 weeks then you can report your case to the financial ombudsman.
Credit brokers must also ensure they use your personal details in a way you have agreed to. They cannot simply pass your personal details to third parties or sell it. Of they engage in acts such as this you can then go ahead and
What is a credit card broker?
A credit card broker will help you source out the best credit cards that fit you based on your credit profile and affordability. A credit broker is not the lender but rather introduces you to a lender who has a credit card that matches your profile.
Cancel a credit broking service
If you have signed up to a credit broking service you can also cancel it and ask for your money back within 14 days as per the FCA’s distance marketing rules.
You don’t have to give a reason why you want to cancel and the credit broker should refund any fees you have paid within 30 days.
The credit broker can only retain part of the fee if it has actually provided you with a service during the period before you cancel.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.