Do Mortgage Brokers Need Credit Broking or Debt Counselling Permissions?
It’s a question we get asked all the time by brokers, and it has popped up even more lately with everyone trying to get their heads around the FCA’s CCR009 regulatory return. Let’s be honest: nothing with the regulator is ever straightforward. Whether you actually need consumer credit permissions depends entirely on what kind of cases you’re writing, how you handle unsecured debts, and what your lenders demand in their agency terms.
To help clear the fog, let’s look at the primary exemptions brokers rely on—including the crucial Article 39J mortgage exclusion—where those protections hit a wall, and why this remains a classic area where guessing can land you in trouble.
1. Credit Broking & The Regulated Mortgage Exemption (And Where It Stops)
Most mortgage brokers assume credit broking doesn’t apply to them because standard residential mortgages are carved out under the Regulated Activities Order (RAO). That’s fundamentally correct: under PERG 2.8.6CG, activities consisting of arranging or making arrangements with a view to a regulated mortgage contract—or introducing a client to an authorised lender—are excluded from credit broking.
If you stick strictly to standard residential and consumer buy-to-let business, this exemption is your primary shield. However, that shield has distinct boundaries:
- Insurance Premium Finance: If you set up premium finance for your clients and charge separate broker fees or interest (rather than standard interest-free instalments), you might accidentally be doing credit broking.
- Commercial and Mixed-Use Land (The 40% Rule): Under MCOB and CONC 1.2.7G, if you arrange borrowing secured on land where less than 40% is used as a dwelling, the mortgage exemption stops applying, and consumer credit rules can kick in. (Then rule on borrower type apply)
- Non-Consumer Borrowers: Borrowing or credit broking for limited companies or partnerships with 4 or more partners is treated as Business-to-Business (B2B) lending. B2B credit broking is generally exempt from FCA regulation. Small Partnerships (2–3 partners) or Sole Traders: If you arrange credit for a sole trader or a partnership with 2 or 3 partners, they are legally classified as consumers. Therefore, that specific transaction is not exempt, and standard credit broking rules apply.
2. Debt Consolidation and Debt Counselling: Where Is the Line for Mortgage Brokers?
Debt consolidation can raise an important regulatory question for mortgage brokers: when does advice about consolidating debts remain part of mortgage advice, and when does it become debt counselling?
Article 39J – The Mortgage Exclusion
Article 39J of the Regulated Activities Order provides an exclusion for certain activities carried on in relation to a regulated mortgage contract or home purchase plan. PERG 17 confirms that Article 39J is relevant to debt-counselling.
The FCA’s example in PERG 17.7 considers advice to consolidate unsecured consumer-credit debts into a regulated mortgage. The FCA explains that, without the exclusion, this would amount to debt counselling, but that Article 39J is likely to apply where the advice is given in relation to a particular regulated mortgage contract and the relevant conditions are met.
But MCOB Still Applies – Where the mortgage involves debt consolidation, the broker must still comply with the MCOB suitability requirements. MCOB 4.7A.15R requires the adviser to consider relevant issues including:
- the cost of extending the period over which a debt is repaid; and
- whether it is appropriate to secure previously unsecured borrowing.
The rules also require consideration of alternatives where a customer is experiencing payment difficulties. Debt consolidation therefore cannot simply be treated as a mechanical exercise of moving debts into a mortgage. The adviser must consider whether the proposed consolidation is suitable.
What About Debts That Are Not Consolidated?
This is where the regulatory boundary becomes more interesting. PERG 17 does not expressly state that all unsecured debts must be consolidated for the Article 39J exclusion to apply. Indeed, the FCA’s example refers to consolidating “a number” of consumer-credit debts.
However, PERG 17 also makes clear that debt counselling can involve advice about how a debtor should deal with their debts. Advice can move beyond factual information where the adviser evaluates the customer’s debts and steers them towards a particular course of action.
That creates an important distinction.
A mortgage adviser may need to consider a client’s wider debt position in order to give suitable mortgage advice. But if the adviser goes beyond that and provides separate advice about the treatment or repayment of an unsecured debt, the debt-counselling perimeter needs to be considered.
What Should Brokers Do?
MCOB 4.7A.25R requires firms to retain the information used to assess suitability and a record of why the advice was considered suitable. The file should therefore clearly demonstrate:
- what debts were considered;
- which debts were consolidated;
- which were not; and
- why the proposed approach was suitable for the customer.
The key question is therefore not simply whether every debt was consolidated. It is whether the advice about the customer’s unsecured debts formed part of the advice on the regulated mortgage contract, and therefore falls within the Article 39J exclusion, or whether the broker has moved into separately regulated debt counselling.
For mortgage brokers, understanding that distinction is critical when giving and documenting debt-consolidation advice.
3. Commercial Realities: Lender Terms and the CCR009 Return
Even if you’ve convinced yourself that your interpretation of the handbook means you don’t technically need these permissions, your lenders might think differently.
The CCR009 Return & RegData: With the CCR009 return bedding in, the FCA is keeping a closer eye on consumer credit. While the online demo forms use smart decision-tree logic, if you hold active permissions, your reporting needs to match what your business is actually doing so you don’t trip any automated alarms at the regulator.
Lender Agency Agreements: A lot of lenders stipulate in their agency terms that you must hold both credit broking and debt counselling permissions just to be on their panel—even if the specific case you’re submitting doesn’t strictly trigger it under FCA rules. They do it simply to save themselves the headache of auditing every single broker’s permissions case by case. If you drop your permissions without checking your lender panels first, you could accidentally find yourself in breach of your agency agreements.
Summary Decision Table
| Activity Undertaken | Do You Need a Permission? | Which Permission? |
| Standard Residential / Regulated BTL Mortgages only (Relying on RAO Article 39J / PERG mortgage exclusions, strictly avoiding non-standard property or un-consolidated debt evaluation) | No | None required |
| Debt Consolidation advice (Evaluating unsecured debts, partial consolidation where full consolidation breaches suitability under MCOB 4.7A) | Yes | Debt counselling (with no debt management limitation) |
| Commercial / Business Lending (Under 40% residential, Limited Company, 4+ Partnership ) | No | None required |
| Insurance Premium Finance (Charging separate fees or interest is applied) | Yes | Credit broking |
Our Recommended Next Steps
If you are reviewing your permissions, we recommend taking four simple steps:
- 1. Review your actual business.
Look at the types of cases you write, particularly commercial, second-charge and other non-standard lending. - 2. Review your debt-consolidation process.
Establish whether you are simply advising on the mortgage or whether you are also providing specific advice about how individual unsecured debts should be treated. - 3. Review your lender agreements.
Check whether your current permissions are required by any of your lender panels or agency agreements. - 4. Review your FCA permissions and reporting.
Make sure your permissions accurately reflect your business and that any CCR009 reporting is consistent with what you actually do.
Our view
There is no sensible “one size fits all” answer to whether a mortgage broker needs credit broking or debt counselling permission. For many brokers, the existing mortgage exclusions will cover their core mortgage activity. But once a business moves into non-standard credit activity or provides advice about unsecured debts beyond what is necessary to assess the suitability of the mortgage, the position needs to be examined carefully.
If you are unsure, don’t rely on assumptions or simply copy what another broker is doing. Review the actual activities, the FCA rules, your lender requirements and your permissions together — and obtain a specific perimeter assessment where the position is unclear.