Do car dealers need FCA authorisation to offer finance?

The short answer

Yes. If your dealership arranges finance for customers, or simply introduces them to a lender, you must be authorised by the Financial Conduct Authority (FCA) — or operate under someone else's authorisation as an "appointed representative." This has been the case since April 2014, when the FCA took over the regulation of consumer credit. It applies whether you arrange hire purchase or PCP through a finance house, or just point a customer towards a finance provider. The only dealers who fall outside it are those who sell strictly for cash and never discuss, arrange, or refer finance at all.

You'll often hear this called a "consumer credit licence." Strictly speaking there's no licence any more — what you need today is FCA authorisation (also called "permission") — but the everyday term is fine, and we use it too. If you want the complete picture of how authorisation works across all industries, our step-by-step guide to getting an FCA consumer credit licence covers it in full. This article focuses on what it means specifically for car dealers.

Why offering finance makes your dealership "regulated"

Here's the part that surprises a lot of dealers: you don't have to lend any of your own money to be regulated. When you arrange finance, you're almost always introducing the customer to a finance company that does the lending — and you earn a commission for it. That act of introducing customers to a lender is called credit broking, and credit broking is itself a regulated activity under FCA rules. So even though the finance house carries the lending risk, it's your introduction that brings you within the regime.

There's usually a second activity in the mix too. When you take a part-exchange that still has finance outstanding on it, settling that existing agreement is a form of debt adjusting. For that reason, a typical motor dealer's authorisation covers two things: credit broking, and debt adjusting limited to the settlement of vehicle finance. Both are things you do every day on the forecourt without thinking of them as "financial services" — but the FCA does.

Which permission do car dealers need?

FCA authorisation comes in two tiers — limited permission and full permission — and for most dealers the answer is limited permission.

The reason is straightforward. Your main business is selling vehicles; finance is something you offer to help customers buy them. Because the credit broking is secondary to your main trade, the FCA treats you as a "supplier," and suppliers can apply for the lighter, cheaper limited permission tier. The usual permission set for a dealer is limited permission secondary credit broking, plus debt adjusting limited to settling vehicle finance so you can handle part-exchanges cleanly.

When a dealer needs full permission instead

You'd move into full permission territory if finance stops being a sideline and becomes a core activity — for example, if introducing customers to lenders becomes a main part of what you do, if you broker finance for purposes unconnected to selling your own vehicles, or if you lend your own money so customers repay you directly (in-house finance). Full permission carries heavier requirements, higher fees, and closer FCA scrutiny.

The alternative worth knowing: appointed representative status

Getting your own authorisation isn't the only way to offer finance legally. You can instead become an appointed representative (AR) of a firm that's already authorised — usually a finance provider or a compliance network that acts as your "principal." The principal takes legal responsibility for your compliance with FCA rules, handles much of the training and monitoring, and the FCA deals with them rather than with you. A lighter version, the introducer appointed representative (IAR), lets you only introduce customers to an authorised firm without getting involved in the detail of the agreement.

It's a genuine and popular route, especially for smaller dealers — but it comes with trade-offs. As an AR you operate under someone else's permissions and rules, you're tied to that principal and often to their panel of lenders, you'll usually pay the network an ongoing fee, and the principal can set conditions or end the arrangement. By contrast, direct authorisation means you hold your own permission on the FCA register, you choose which lenders to work with, you pay no network fee, and you're not dependent on anyone else's appetite to keep you on — in exchange for carrying your own compliance responsibilities.

Direct authorisation or AR — which is right for you?

There's no universally right answer; it depends on how you want to run the business. AR or IAR status can suit a very small or brand-new dealer who wants minimal regulatory involvement and is happy working within one principal's panel. Direct limited permission tends to suit dealers who want independence: your own authorisation, freedom to work with any lender, no ongoing network fee, and full control of your finance proposition. It's also worth knowing that many dealers start as an AR and move to direct authorisation as they grow — the FCA itself notes that an AR should consider becoming directly authorised once it gets larger or its income starts to dwarf its principal's. If you'd rather own your authorisation than rent it, direct limited permission is the route — and it's more achievable than most dealers expect.

What else you'll need to get right

Authorisation is the gateway, not the whole job. However you're authorised, you'll need to follow the FCA's consumer credit rules (set out in its "CONC" sourcebook), advertise finance fairly under the financial promotions rules, check that customers can afford the repayments, disclose any commission clearly, handle complaints properly, and meet the FCA's Consumer Duty — the requirement to deliver good outcomes for your customers, including those who are vulnerable. These are ongoing obligations rather than one-off boxes to tick, and they apply proportionately to a small limited permission firm.

What you need to apply

For a direct limited permission application, you'll typically prepare a regulatory business plan, your compliance arrangements, a set of key policies (financial promotions, complaints handling, treating vulnerable customers fairly, and anti-money laundering), basic financial information, and details of an approved person the FCA will assess as "fit and proper." The application itself is submitted through the FCA's online portal, Connect. We walk through the full document list and the process end to end in our guide to getting authorised. If you'd rather have it prepared for you, our fixed-price service for car dealers does exactly that.

What it costs and how long it takes

There are two separate costs to budget for:

• The FCA's application fee — currently around £550 for a limited permission credit broking firm, paid directly to the FCA. The FCA sets and occasionally changes its fees, so check the current figure on its website.
• Preparing the application — you can do it yourself, pay a compliance consultancy (often £2,000 or more), or use a fixed-price service. This is where the cost varies most.

There's also a small annual fee to the FCA once you're authorised. On timing, six months is the FCA's statutory limit for deciding a complete application — and longer if it's incomplete. In practice, complete limited permission applications are often decided more quickly, though that's typical rather than guaranteed. The single biggest factor in avoiding delay is submitting a complete, well-prepared application the first time.

What happens if you offer finance without authorisation

This isn't a grey area worth gambling on. Arranging or introducing finance without being authorised — and without operating as an appointed representative — is a criminal offence. It can also make your credit agreements unenforceable, which creates real problems if you ever need to rely on them, and it exposes the business to FCA enforcement and reputational damage. If there's any doubt about whether you need authorisation, confirm your position before you start offering finance.