Can a car dealer be an appointed representative for credit broking?

Yes. Credit broking is an activity an AR can carry on under SUP 12.2.7. A dealer can instead hold its own limited permission, and the FCA names motor dealers as typical limited permission brokers. Either way, the CONC rules on commission disclosure and promotions apply to its broking.

Where does the motor finance redress scheme stand?

The FCA made the scheme in PS26/3, in force from 31 March 2026. After legal challenges, the Upper Tribunal suspended parts of it on 2 July 2026, and the hearing is listed for 16 to 26 February 2027. Until then lenders need not calculate or pay scheme compensation, but must keep identifying complaints and gathering data, and the FCA has told firms to plan for the possibility that the scheme is quashed.

What must a dealer broker do under the scheme if it is not a lender?

When a lender asks, the broker must provide documents or information about commission and disclosure within one month, or confirm it does not hold them. That duty was not suspended in July 2026.

Does a retailer offering Buy Now Pay Later need to be an AR?

Not for deferred payment credit alone. Since 15 July 2026 its lenders must be authorised, but broking it is exempt. A retailer that brokers other regulated credit, such as instalment or hire purchase finance, still needs a permission or an AR appointment.

How many of a dealer's directors need FCA approval?

Where the AR's scope is only credit-related activity or non-investment insurance and its main business is unregulated, only one governing function needs approval (SUP 10A.1.16R). The customer function does not apply to credit-related activity.

Industries

Consumer credit

Oversight for dealer and retailer networks

For lenders and broker principals whose ARs are car dealers, retailers and home improvement firms broking credit alongside their main business.

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Your network

Risk directs your next action

Low risk43

Medium risk4

High risk1

The largest AR sector, and mostly small firms

Consumer finance has more ARs than any other sector. Most are businesses whose main trade is unregulated, so a principal oversees credit broking that is a sideline for the firm doing it.

consumer finance ARs in March 2026: 16,690
of credit ARs earned under £100,000 of regulated revenue (2023): 93%
regulated revenue earned by consumer finance ARs in 2025: £3.3bn

The rules that matter in this sector

Commission disclosure: A broker must prominently disclose any commission or fee that could affect its impartiality, explain how it may affect what the customer pays, and give the amount on request (CONC 4.5.3R, 4.5.3AR, 4.5.4R). Discretionary commission arrangements in motor finance are banned (CONC 4.5.6R).
Promotions and status: A broker that is not a lender must say so prominently, use its legal name as shown on the Register, and state whether it works with one lender or several (CONC 3.7). AR websites need the correct status disclosure under GEN 4.
One approved person, not every director: Where an AR's scope is only credit broking or general insurance and its main business is unregulated, such as a car dealer, only one governing function needs FCA approval (SUP 10A.1.16R).
More than one principal is allowed: Credit broking is not on the single-principal list in SUP 12.5.6AR, so a dealer may broke for several principals. The contract must require it to tell you about any other appointment (SUP 12.5.5R).
GAP sold with the car: A dealer selling GAP is an insurance distributor. It must give the prescribed information and wait at least two clear days before concluding the sale, unless the customer starts it sooner and confirms they understand (ICOBS 6A.1.6R, 6A.1.7R).

What the FCA has said recently

15 July 2026
Buy Now Pay Later regulated
Deferred payment credit lenders now need authorisation. Broking it is exempt, so a retailer offering it at checkout needs no permission or AR appointment for that product alone.
2 July 2026
Motor finance scheme partly suspended
The Upper Tribunal suspended scheme compensation pending a legal challenge, with the hearing listed for 16 to 26 February 2027. Brokers must still give lenders the documents they ask for within one month, or confirm they hold none.
31 March 2026
Motor finance redress scheme in force
PS26/3 set out the scheme for agreements from April 2007 to November 2024 where commission was not properly disclosed: 12.1m agreements and about £7.5bn of redress, on the FCA's estimate.
1 August 2025
Supreme Court judgment in Johnson
Dealers acting as credit brokers owed customers no fiduciary duty, but Mr Johnson's credit relationship was unfair: commission was 55% of the charge for credit, poorly disclosed, and a tie with the lender was concealed.
23 April 2024
FCA review of credit broking principals
It found name-only Companies House checks, automated onboarding with no human judgement, MI limited to complaints, relationship managers monitoring their own ARs, IARs straying out of scope and AR websites using the FCA logo.

Between annual reviews

A dealer changes hands: Companies House and the FCA Register are checked for new directors, late accounts, dissolution and a new principal. Each change becomes an issue with an owner.
Complaints rise at one site: Quarterly returns collect complaints by category. A significant increase is a trigger for a review under SUP 12.6A.3R.
A lender asks for broker files: Agreements, disclosures and returns sit on each firm's record, so you can answer within the month the scheme allows.

What to collect from each AR

Merrin schedules these as returns, by risk tier, and puts each one with the firm or Individual who needs to provide it.

Returns & tasks

Lender panel, ties and any exclusivity or first-refusal terms
Commission structure per lender, and confirmation that no discretionary commission is used
The disclosure documents used at the point of sale
Complaints by category: commission, affordability, goods and add-ons
Regulated revenue and remuneration for REP025
Finance volumes by lender, and GAP and other add-on sales
Website and advertising links for promotion checks
Staff training, and fit and proper declarations from directors
The firm's financial position

Where Merrin fits

Merrin keeps each dealer's record, people, agreement, returns, risk and review history together. Your compliance team can follow a dealer's history without rebuilding it from emails.

Keep your existing systems

Keep your dealer management and finance application systems. Merrin does not make credit decisions, handle customer applications or replace your lender panel.

Complaint case handling, helpdesk integrations and financial promotion reviews are planned work.

See the roadmap

Consumer credit is Merrin’s initial sector focus.

Questions from consumer credit principals

Can a car dealer be an appointed representative for credit broking?
Yes. Credit broking is an activity an AR can carry on under SUP 12.2.7. A dealer can instead hold its own limited permission, and the FCA names motor dealers as typical limited permission brokers. Either way, the CONC rules on commission disclosure and promotions apply to its broking.
Where does the motor finance redress scheme stand?
The FCA made the scheme in PS26/3, in force from 31 March 2026. After legal challenges, the Upper Tribunal suspended parts of it on 2 July 2026, and the hearing is listed for 16 to 26 February 2027. Until then lenders need not calculate or pay scheme compensation, but must keep identifying complaints and gathering data, and the FCA has told firms to plan for the possibility that the scheme is quashed.
What must a dealer broker do under the scheme if it is not a lender?
When a lender asks, the broker must provide documents or information about commission and disclosure within one month, or confirm it does not hold them. That duty was not suspended in July 2026.
Does a retailer offering Buy Now Pay Later need to be an AR?
Not for deferred payment credit alone. Since 15 July 2026 its lenders must be authorised, but broking it is exempt. A retailer that brokers other regulated credit, such as instalment or hire purchase finance, still needs a permission or an AR appointment.
How many of a dealer's directors need FCA approval?
Where the AR's scope is only credit-related activity or non-investment insurance and its main business is unregulated, only one governing function needs approval (SUP 10A.1.16R). The customer function does not apply to credit-related activity.

Sources

Checked against these sources on 23 October 2026. This is general information, not legal advice.

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