Appointed representative vs independent broker: which for commercial finance?
For unregulated commercial finance to limited companies, you do not need FCA authorisation of any kind. Appointed representative and directly authorised status only matter when you broker regulated products, or lend to individuals, sole traders or partnerships. The right route depends on what you sell and who you sell it to.
Two terms dominate the advice on launching a commercial finance brokerage: appointed representative (AR) and directly authorised (DA). Almost everything written about them assumes you need one or the other. For a large part of commercial finance, that assumption is wrong.
Broker unregulated finance products to limited companies and you sit outside the Financial Services and Markets Act 2000 and the Regulated Activities Order entirely. No FCA authorisation, no AR agreement with a principal firm taking a revenue share, no supervision fees, no reporting cycles. CoreFi is built around that model. Knowing where the boundary sits, and what changes when you cross it, is the most important call you make before your first deal.
The three routes
Unregulated and independent. Restrict your activity to unregulated commercial finance placed with limited company borrowers and you operate outside the FCA's regime. Unsecured business loans, invoice finance, asset finance, commercial bridging, merchant cash advances: that is the core. No AR agreement. No FCA application sitting in a queue for months. You write your first deal as soon as you are set up.
Appointed representative (AR). An AR trades under the regulatory umbrella of a principal firm that holds its own FCA authorisation. The principal takes on regulatory responsibility for what you do and must supervise your activity. You pay for that cover, typically a percentage of revenue, a monthly fee, or both. This route suits brokers who want to place regulated products without running the full FCA application themselves.
Directly authorised (DA). A DA firm applies to the FCA for its own permissions: several months of processing, a detailed business plan, a compliance framework, ongoing reporting, and for certain activities, capital adequacy obligations on top. You get the most flexibility and carry the most regulatory overhead. Most new brokers in unregulated commercial finance have no reason to go down this route at the start.
When AR or DA status actually matters
The boundary is set by product type and borrower type, not deal size.
You need AR or DA status before you broker any of the following:
- Consumer credit to individuals: personal loans, hire purchase on personal vehicles, regulated bridging - Residential mortgages, first or second charge - Start Up Loans up to £25,000 to individuals, which are regulated consumer credit backed by the British Business Bank - Finance to sole traders or partnerships in certain circumstances. Article 36A(4) of the Regulated Activities Order can pull these borrowers inside the regulated perimeter even for products that would otherwise be exempt as business loans
Get this wrong and you are not dealing with a compliance inconvenience. Arranging a regulated activity without the correct permissions is a criminal offence under FSMA. If any of those borrower or product types are in your plan, sort your regulatory position before you take on a single client.
Why the limited company exemption is not a loophole
The exemption that makes unregulated commercial broking viable comes from the nature of the borrower. A limited company is a distinct legal entity. The consumer protection rules written for individuals do not attach to it. When a limited company borrows for a genuine business purpose, arranging that finance falls outside the Regulated Activities Order framework.
This is not a technicality waiting to be closed. It is a deliberate feature of UK financial regulation, which separates consumer protection from business and wholesale lending. The FCA regulates conduct toward consumers. A limited company director signing a business loan agreement is not a consumer in the statutory sense.
We place unregulated commercial finance with limited company borrowers every day. The legal footing is solid. The constraint is product and borrower type, not deal size or sector.
How to choose your route
Start with your intended product set and who you are selling to.
SME commercial finance to limited companies is where most of the UK business lending volume sits, and it is CoreFi's primary model. No FCA permissions, no AR arrangement, no waiting. You launch as an independent broker, keep full ownership of your business, and avoid the ongoing cost and compliance overhead.
Adding regulated products later, say residential mortgages or consumer credit, gives you two options. Build those activities into a separately FCA-authorised entity, or take AR status under a suitable principal for those specific permissions while keeping your unregulated commercial book independent. Brokers run both structures in parallel. It works, but it adds admin.
Sole traders and partnerships are the grey area. The position turns on the specific product, the borrower's stated purpose, and which RAO exemptions apply. Do not guess. Take legal advice on your exact activities before you accept that first sole-trader client.
There is no universal right answer. Pick the route that fits the products you place and the borrowers you place them for.
What CoreFi provides, and what it does not
CoreFi is a commercial broker platform. We are not a lender, not a principal firm, and not an AR network. We do not hold FCA authorisation and we do not provide regulatory cover for regulated activities.
What we do provide: a panel of specialist lenders across unsecured lending, asset finance, invoice finance, bridging and development finance; a deal CRM with stage history and action queues; document handling and submission packs; a lender-matching engine; broker training; and commission splits from 55% at Associate tier to 70% at Partner, with no franchise fee (many competitor networks charge roughly £6,000 to £30,000 to join) and no minimum volume before you earn.
If your plan is unregulated commercial finance to limited companies, this is built for exactly that. If your plan includes regulated products or lending to individuals, sole traders or partnerships, resolve your regulatory position separately before placing those deals. We will be straight with you about that line, because getting it wrong is not something you fix with a phone call.
Frequently asked questions
Do I need to be an appointed representative to broker commercial loans?
Not for unregulated commercial finance to limited companies. AR status is only needed when you broker regulated products, such as consumer credit or residential mortgages, or when you broker to certain non-corporate borrowers like sole traders or partnerships where the Regulated Activities Order perimeter applies. For standard SME commercial lending to limited companies you can trade independently with no FCA authorisation at all.
What is the difference between an AR and a DA broker?
An appointed representative trades under the regulatory cover of a principal firm that holds its own FCA authorisation. A directly authorised firm holds its own FCA permissions and is responsible for its own compliance. Both structures only matter for regulated activities. If you restrict your work to unregulated commercial finance for limited companies, neither is required.
Can I start as an AR and move to independent later?
Yes. Some brokers start under an AR agreement to access regulated products or a principal's infrastructure, then ring-fence their unregulated commercial finance activity in a separate independent entity. The two structures are not mutually exclusive. Brokers run a separate FCA-covered arrangement for regulated referrals alongside an independent firm for their unregulated commercial book.
Does CoreFi operate as a principal firm for AR brokers?
No. CoreFi is a commercial broker platform focused on unregulated commercial finance. We are not an FCA-authorised principal and do not provide regulatory cover for regulated activities. Brokers who join CoreFi are independent operators placing unregulated commercial finance with limited company borrowers.
Is there a qualification I need to become an independent commercial finance broker?
No mandatory qualification applies to unregulated commercial finance broking. CeMAP is a residential mortgage qualification and is not relevant here. CoreFi provides structured broker training as part of the platform. You do not need a formal certificate before placing deals, though solid product knowledge and a firm grasp of lender criteria are non-negotiable if you want to build a credible track record.
Launch your brokerage with CoreFi
No franchise fee, no FCA application for unregulated commercial finance to limited companies, and commission splits from 55% on your first deal. Book a call to find out whether our platform fits your plan.
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