Role and scope
Dealers introducing car buyers to lenders may conduct regulated credit broking even when vehicle sales remain their main business. Identify the creditor, seller and intermediary and distinguish a finance quotation from the final agreement. Hire purchase and personal contract purchase involve obligations different from cash transactions. The legal assessment should record the actual regulated product, entity and applicable jurisdiction. A business's commercial description does not decide which statute applies. Document the responsible reviewer, activity performed and any specific exemption relied on. Consumers should be able to identify the participant responsible for the explanation or service. Avoid conclusions based solely on a partner's standard contract or an internal sales category.
Permissions and rules
In the UK, Article 36A of the Regulated Activities Order defines relevant broking activities. The FCA recognises secondary brokers, but limited permission is conditional rather than automatic. Assess sales representatives, showroom applications, online finance tools and any exemption before deciding the regulatory status. Regulatory duties vary by the activities and channel used. Review the authorisation held by each entity and distinguish financial promotion approval from permission to broker credit. The consumer journey may change when a retailer begins collecting applications or recommending lenders. Preserve the operative rule and the source of facts used for classification. Reconsider the conclusion whenever the lender panel or business model materially changes.
Commission and transparency
A motor dealer receiving finance commission should assess CONC 4.5 disclosure duties. The FCA has issued specific guidance on communicating motor finance commissions. Disclosures may be needed where remuneration could affect impartiality or materially influence a decision. Historical motor finance redress developments need current verification rather than an unsupported promise of compensation. A disclosure should be timely and understandable, not merely technically present. The information given should match current commission agreements and the role the intermediary actually performs. Evaluate the potential effect of remuneration on consumer choices. Keep records of what was visible at the point of decision and what information was available on request. Material conflicts require a substantive assessment rather than a generic disclosure sentence.
Consumer information
Consumers should understand the cash price, deposit, repayment period, cost of credit, any final instalment and the identity of their lender. A dealer should not claim guaranteed acceptance or unrestricted market access where only selected lenders participate. Ensure the explanation matches the actual finance product. Evaluate the consumer-facing message in context, including earlier advertisements and subsequent application screens. A retailer or intermediary may describe an estimated payment before a credit assessment, but must distinguish illustration from approval. Check for inaccurate price, duration and fee claims. Where an offer has changed, update downstream content and maintain a reliable correction process.
Conflicts and operations
Sales incentives may influence the recommendation of a lender or repayment structure. Review commission tiers, bonus targets and staff scripts against consumer understanding and applicable conduct rules. Financial circumstances submitted for applications must not be manipulated to secure approval. Investigate complaints about misleading interest rates or finance options. Operational controls should cover incentives, staff behaviour, marketing partners, lender relationships and customer complaints. Review whether a process promotes one finance option for commercial reasons while promising impartial advice. A well-written policy does not establish that the actual consumer interaction was fair. Test real transactions and correct systematic discrepancies, recording ownership and follow-up.
EU and jurisdictional differences
Directive (EU) 2023/2225 has a separate credit-intermediary definition and updated national requirements generally applying from 20 November 2026. UK permissions do not establish compliance across the EU. A dealer offering finance in multiple countries should document each credit type, lender relationship and national requirements. Current UK requirements and future Member State measures should be mapped separately. The Directive's date does not eliminate national implementation or transitional provisions. A cross-border intermediary may require different status wording, fee information and customer protections in each market. Assign owners to monitor legal changes and verify that technical changes work before public deployment.
Audit and quality control
Audit vehicle quotations, completed applications, lender panel descriptions, remuneration terms and sales training. Include declined applications, early settlement questions, trade-ins and finance complaints. Retain the exact information the customer received, its date and the resolution of material discrepancies. Audit evidence should connect the exact promotion or sales material to the transaction, date, lender and commission structure. Include ordinary cases and complaints or rejected applications. Retain documents and meaningful customer communications rather than only policy templates. Where systemic defects are discovered, record affected journeys, corrective actions and testing that demonstrates the issue was resolved.
Frequently asked questions
Are credit intermediaries governed identically in all countries?
No. National rules, product scope and actual activities govern.
Does every commission create identical duties?
No. The legal conditions and the effect on consumer decisions matter.
Primary sources
FCA CONC 3.7 ↗FCA motor finance commission guidance ↗Directive (EU) 2023/2225 ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.