Credit brokers

A credit broker doesn’t lend money.

Instead, they’ll connect people looking for credit with lenders and compare loan deals from different providers.

They can also introduce you to a lender or sometimes another broker.

They’ll then charge a fee or get commission from the lender if you decide to take out a loan with them.

Rather than lending money directly, a credit broker acts as a middleman between you and other lenders.

That means you can get access to many lenders and deals.

And as part of the process, they might carry out a soft credit check and charge a fee.

By contrast, a lender provides the loan directly to you and will approve or reject your application themselves.

They’ll also transfer money straight to your bank account.

Ultimately, your decision on who to turn to depends on what matters most when you’re looking for credit - choice or speed.

A credit broker will show you what options are available and introduce you to multiple lenders.

But a lender will deal with you directly and it’s possible your application could be approved more quickly.

But of course, you can’t guarantee which option will be cheapest, so it’s important to check affordability.

Yes.

In the UK, all credit brokers must be authorised and regulated by the Financial Conduct Authority (FCA).

This means they have to follow strict rules to protect you, such as: 

• clearly stating they’re a broker, not a lender.
• giving you written information about any fees
• getting your written agreement before charging any fees
• providing their legal and trading names
• not sharing your personal details without your consent
• giving you a refund within 14 days if you change your mind about using their service
• refund part or all of a broker fee if you don’t take out a loan within six months

You can find out if a credit broker is properly authorised and regulated using the Financial Services Register.

Credit brokers may charge you to use their services and each one will set their own fees.

So before signing up to anything, make sure the broker explains all fees in writing and confirms how and when it will be charged.

You should also make sure that if you agree with the terms being presented, you do so in writing.

If you’ve paid a fee without agreeing in writing, you can ask for your money back.

Yes, you can get a refund if a credit broker has charged you without following the rules.

For example, they must give you a written information notice before taking any money.

If they didn’t, you can complain and ask for a refund.

And if you can’t resolve the situation this way, you could contact the Financial Ombudsman Service for help.

If you’re not sure if you can afford a loan, it might be worth getting to grips with your household budget.

If you’re uncertain, call us and we can go through your budget, look at what benefits and grants you could be entitled to, and discuss alternatives to further borrowing.

A legitimate credit broker will be listed on the FCA’s Financial Services Register and clearly state they’re a broker, not a lender.

You should also look out for red flags that might suggest an organisation isn’t what it seems, such as: 

• being asked for fees via money transfer services or vouchers
• being charged for insurance, tax or “loan release” fees upfront
• having payments taken before you get written notice of fees

If any of these happen, report it to Action Fraud or the FCA immediately.

And if you see an offer that seems too good to be true, a good rule of thumb is to avoid it.