FCA thematic review on credit broking remuneration models

The FCA has published its thematic review on the impact of credit broking remuneration models at the point of sale. The thematic review covered a wide variety of credit brokers offering loans or finance provided by a third party.

In its 2017/2018 Business Plan, the FCA set out its intention to focus on inter-firm remuneration in consumer credit. The FCA was concerned that inter-firm remuneration could result in consumer harm, for example where brokers were selling products to earn higher commission rather than prioritising customers’ needs. The FCA did not find evidence that inter-firm commissions are generally resulting in significant harm to consumers.

In addition the FCA found that most finance brokers in the survey did not receive commission on credit products and that majority of finance brokers in the survey only used one lender. It did not find finance brokers actively looking to negotiate higher commission rates with lenders, or to switch to lenders that provide higher commission, which might have led them to offer poorer value finance products.

The FCA will continue to monitor credit broking activity as part of its ongoing supervisory strategy and address harm in individual firms where it sees it.