Scope and business model
An online merchant can sell goods while an independent creditor finances the purchase. The seller, creditor and any intermediary may be different legal entities. Identify who provides credit, collects repayments and owns customer complaints. A merchant-hosted application is not necessarily a loan offered by the merchant itself. Record the legal entity, the actual customer journey and the applicable jurisdiction before drawing a conclusion. Marketing labels cannot override statutory classification, and a platform operating across several countries needs a separately grounded assessment. Distinguish facts established from contractual documentation from assumptions about how a typical transaction works. Consumer-facing explanations should reflect the real product and business relationships at the time of contact.
Regulatory activity and permission
UK retailers introducing consumers to third-party lenders may perform credit broking under article 36A. FCA guidance recognises secondary brokers and conditional limited permission arrangements. The assessment depends on the merchant's actual activities, main business, exemptions and other permissions. A checkout redirect is not automatically exempt. Review the precise regulated activity, agreement type, customer and commercial purpose. The same business can perform different functions across product lines and sales channels. Maintain an activity map showing introductions, application preparation and final contract execution. Record any exemption relied upon and who approved that interpretation. A partner's statement that it is only referring customers cannot replace review of the actual legal requirements.
Advertising and consumer information
Product pages and checkout screens should distinguish cash price, credit terms, lender identity and any illustrative monthly payment. Avoid suggesting that every shopper is guaranteed approval or that the merchant itself makes the lending decision. Confirm applicable FCA CONC financial promotion and broker status disclosures before deploying finance advertising. Review the full path from advert to payment or application, not merely the formal agreement page. Mobile layouts, promotional banners, prefilled fields and delayed disclosures can change what consumers understand. A legal-name footer cannot repair a prominent misleading promise. Save the screen or message actually seen by the customer and record how representations are corrected when products or partnerships change.
Commission and commercial arrangements
A merchant may receive referral commission or incentives for promoting one credit provider. Consider whether remuneration changes the prominence or recommendation of finance. Relevant UK broker commission rules apply according to their conditions. Do not imply a whole-market comparison when a checkout offers one lender. Map every material financial incentive and distinguish payments received by the merchant or intermediary from the lender's charge to the consumer. Evaluate whether recommendations, rankings or sales conversations can be influenced. Explain commercial limits truthfully and check conditional disclosure duties against the actual facts. Keep approved scripts and training alongside supplier contracts, rather than assuming the sales team knows how its commission structure affects consumer protection.
Applications and personal data
Application data may pass between the shop, payment platform and finance provider. Document recipients, purposes, access controls and correction routes. Clearly distinguish completion of a goods order from submission and acceptance of a credit application. Check what happens if financing fails after stock is reserved or a card payment is partially made. Maintain clear data ownership, security and escalation controls across all participants. A consumer's request to correct an application or object to marketing should reach the entity capable of acting. Agreements should specify responsibility for failed applications, duplicate leads and erroneous balances. Test end-to-end processing rather than relying on a successful API response. Preserve proportionate records while respecting applicable privacy and retention requirements.
Jurisdiction and CCD2 changes
CCD2 revises consumer credit coverage and provisions concerning intermediary activities and deferred payments. National rules generally apply from 20 November 2026, with transitional and product-specific conditions. Distinguish merchant-funded deferred payment from third-party financing, and check the current law of each market. Do not describe the revised Directive as a single currently operative rulebook for all Member States. Confirm national implementation, product scope, transition provisions and the regulatory position in the country where the service is offered. A UK credit broking permission does not itself establish authorisation throughout the EU. Assign ownership for legal changes and test the related customer journey before deployment. Document the rule applied and its effective date.
Audit tests and case evidence
Test mobile and desktop checkout, rejected credit, product returns, cancelled orders and split cash-credit purchases. Preserve screenshots, loan partner terms, application handoff events and refund evidence. Review complaints where consumers think returning an item automatically cancels credit, and explain applicable linked-credit rights without overgeneralising. Sampling should include ordinary successful sales and problematic exceptions. Check who made each representation, which version of the form or advert was shown, what the consumer authorised and how the account was handled afterward. Record a corrective action owner and retest after remediation. Repeated complaints about unexpected contact, unclear finance identity or inaccurate charges may indicate a process defect rather than an isolated employee error.
Frequently asked questions
Does every merchant financing promotion require identical permissions?
No. Assess actual activities, agreement type, local rules and exemptions.
Are current FCA duties identical to CCD2 national requirements?
No. The UK and each EU Member State have distinct legal frameworks.
Primary sources
FCA credit broker regulatory guide ↗FCA secondary credit broker guidance ↗Directive (EU) 2023/2225 ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.