Customers expect finance to be part of the vehicle-buying journey. But what happens if your dealership isn't directly authorised by the Financial Conduct Authority (FCA)?
A dealership must not carry out regulated credit-broking activities unless it has the appropriate FCA permission or an applicable exemption. However, depending on the dealership, its activities and the arrangement in place, there may be other compliant routes that allow customers to be introduced to an authorised finance provider or broker.
This is an important distinction.
Not being directly FCA authorised doesn't necessarily mean finance has to be completely disconnected from your vehicle sales process. But it also doesn't mean a dealer can simply start discussing, arranging or promoting regulated finance without considering the regulatory requirements.
Here's what dealers need to know.
Do motor dealers need to be FCA authorised to offer finance?
Motor dealers introducing customers to third-party finance providers will commonly be carrying out credit-broking activities.
The FCA explains that a motor dealer that owns the vehicles it sells and introduces customers to third-party finance providers is likely to require Limited Permission Secondary Credit Broking if it wants to conduct that regulated activity directly.
Different permissions can be required depending on what the dealership actually does. For example, helping customers with part-exchange vehicles that have outstanding finance can introduce additional regulatory considerations.
That's why there isn't one FCA permission that automatically fits every motor dealer.
The dealership's business model and activities matter.
Can a dealer introduce a customer to a finance provider without being directly FCA authorised?
Potentially, but only where the introduction falls within an appropriate regulatory arrangement, exemption or exclusion.
One potential route is for a business to operate as an Appointed Representative (AR) of an FCA-authorised firm.
There is also a more limited category known as an Introducer Appointed Representative (IAR).
An IAR's permitted activities are restricted. Broadly, the FCA describes the scope of an IAR as being limited to:
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Making introductions to its principal or members of the principal's group
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Distributing non-real-time financial promotions relating to products or services available through its principal or group
An IAR arrangement therefore isn't the same as a dealership receiving unrestricted permission to arrange or advise on finance.
The activities the dealership can undertake depend on the specific arrangement in place.
What is an Appointed Representative?
An Appointed Representative is a firm or person that carries out certain regulated activities under the responsibility of an FCA-authorised business, known as the principal.
The principal has significant responsibilities.
Before appointing an AR, the authorised firm must carry out appropriate checks and due diligence. It also needs adequate systems and resources to oversee the AR and its regulated activities.
An AR therefore isn't simply a badge a dealership can add to its website.
There needs to be a formal arrangement with an authorised principal, appropriate onboarding and ongoing oversight.
What is an Introducer Appointed Representative?
An Introducer Appointed Representative is a more restricted form of Appointed Representative.
Its role is focused on introductions rather than conducting the wider finance journey itself.
This can potentially create a useful distinction for a motor dealer.
The dealer concentrates on selling the vehicle.
The authorised finance business handles the agreed finance journey.
However, the dealership must stay within the boundaries of its approved activities.
Can a dealer just put a finance link or QR code on its website?
This needs to be considered carefully rather than assumed to be automatically permitted.
The answer can depend on what the dealer is doing, how the link or QR code is presented, the wording surrounding it, whether the communication amounts to a financial promotion, whether the dealer receives remuneration and the regulatory arrangement that exists between the businesses.
That's why simply copying another dealership's finance wording or adding a generic "Apply for Finance" button isn't a sensible approach.
The customer journey should be reviewed as a whole.
What can a non-FCA-authorised dealer say about finance?
Again, this depends on the regulatory arrangement and the activities the dealership is permitted to undertake.
There can be an important difference between:
directing a customer into an approved finance journey
and
actively arranging, recommending, explaining or promoting regulated finance.
Dealers operating through an approved introducer route should follow the communications, processes and limitations established by the authorised principal.
That can include how finance is referred to:
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On the dealership website
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In vehicle advertisements
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On social media
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In the showroom
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During telephone conversations
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In emails and messages
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Through QR codes or digital links
The aim should be to make it clear to the customer who they are dealing with and who is providing the finance service.
Why does FCA authorisation matter for motor dealers?
Consumer credit is regulated because finance can have a significant impact on customers.
The FCA expects firms involved in credit broking to meet regulatory standards and deliver good outcomes for retail customers.
Among other requirements, authorised credit brokers need to consider areas including customer communications, financial promotions, vulnerable customers, complaints and Consumer Duty requirements.
Authorisation and appropriate regulatory arrangements therefore aren't simply administrative exercises.
They're part of protecting customers throughout the finance journey.
What happens if a dealership isn't FCA authorised?
If your dealership isn't FCA authorised, the first step shouldn't be to start advertising finance and work out the compliance afterwards.
Start by establishing what activities you actually want to perform.
For example:
Do you want to arrange finance yourself?
You may need to investigate FCA authorisation and the appropriate consumer-credit permissions.
Do you simply want customers to have somewhere to explore finance?
An approved introducer arrangement may potentially provide a route, depending on your dealership and the proposed operating model.
Do you want to discuss products, payments and finance options with customers?
That requires particularly careful consideration because the activities you undertake may go beyond simply introducing a customer.
Understanding that distinction at the beginning can save considerable problems later.
Introducing Eurodrive Connected Finance
Eurodrive Motor Finance has developed Connected Finance to explore appropriate routes for eligible dealers that aren't directly FCA authorised.
Rather than the dealership trying to manage the customer's finance journey itself, an approved arrangement can create a clearer handover between the vehicle sale and the finance enquiry.
Subject to eligibility, due diligence, approval and the agreed operating model, an approved dealership may receive a dedicated digital route, such as a link or QR code, allowing customers to begin an agreed Eurodrive-supported finance journey.
The principle is simple:
1. The customer is interested in a vehicle
The dealership handles the vehicle sale.
2. The customer wants to explore finance
They follow the dealership's approved route into Eurodrive.
3. Eurodrive supports the agreed finance journey
The finance element is handled through the approved process.
4. The dealership stays connected to the vehicle sale
Helping maintain a smoother journey between vehicle interest and finance enquiry.
Does every non-FCA-authorised dealer qualify?
No.
An introducer or representative arrangement shouldn't be viewed as an automatic alternative to FCA authorisation.
Before approving a dealership, factors may need to be considered including:
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The dealership's legal entity
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Business model
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Current FCA status or permissions
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Website
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Advertising
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Customer journey
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Trading history
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How finance enquiries will be generated
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Customer communications
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Ability to follow the agreed operating model
If an appropriate route is available, the dealership also needs to stay within the scope of that arrangement.
Can we still advertise monthly payments?
This isn't something a non-authorised dealership should assume it can do simply because it has an introducer arrangement.
Finance advertising and financial promotions are regulated areas.
What a dealership can communicate will depend on its circumstances, the promotion itself and the arrangement in place.
Approved dealers should therefore use the processes, wording and promotional materials agreed with their principal rather than creating their own finance promotions independently.
Can we discuss finance products with customers?
The activities permitted will depend on the dealership's regulatory status and agreed operating model.
An introducer arrangement shouldn't be interpreted as unrestricted permission to recommend finance products, provide regulated advice or arrange finance.
Where the agreed model is based on introduction, the distinction should remain clear:
The dealer sells the vehicle.
The authorised finance business supports the finance journey.
Do we need FCA authorisation if we only sell a few cars on finance?
The number of finance customers isn't necessarily what determines whether an activity is regulated.
What matters is the nature of the activity being undertaken and whether an appropriate permission, exemption or exclusion applies.
A dealership should therefore establish its regulatory position before carrying out regulated credit-broking activities.
Is becoming an Appointed Representative the same as becoming FCA authorised?
No.
An Appointed Representative operates under the responsibility of an FCA-authorised principal for the regulated activities covered by its appointment.
The principal is responsible for overseeing those activities and must carry out appropriate due diligence and ongoing monitoring.
Direct FCA authorisation is different. The dealership itself holds the relevant regulatory permissions and is directly responsible for meeting the associated FCA requirements.
Can a non-FCA-authorised dealer offer car finance?
The important question isn't simply whether a dealer can "offer finance".
It's what the dealership is actually doing within the customer journey.
If a dealer intends to carry out regulated credit-broking activities itself, appropriate FCA authorisation will generally be required unless an exemption applies.
Alternatively, depending on the circumstances, an approved representative or introducer arrangement with an authorised firm may provide another route.
Either way, the regulatory position should be established before the dealership begins carrying out the relevant activities.
Not FCA authorised? Start with the right route.
Customers asking about finance doesn't have to mean losing them from the vehicle-buying journey.
But compliance needs to come first.
Eurodrive can review your dealership, current permissions and customer journey to establish whether an approved Connected Finance route may be appropriate.
If eligible, we'll explain the operating model, what your dealership can and can't do, and how customers can be directed into the Eurodrive-supported finance journey.
Not FCA authorised? Check your eligibility for Eurodrive QR Club.
This article provides general information only and should not be treated as legal or regulatory advice. Whether an activity is regulated and what permissions or exemptions apply depends on the circumstances. Dealerships should establish their individual regulatory position before undertaking regulated activity.
Eurodrive Motor Finance is a trading name of European Vehicle Contracts Limited, authorised and regulated by the Financial Conduct Authority, FRN 649225. We act as a broker, not a lender.
