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.
If you are researching how to start a commercial finance brokerage, you will quickly encounter two terms: appointed representative (AR) and directly authorised (DA). Most of what you read online assumes you need one or the other. For a large slice of commercial finance, that assumption is wrong.
When you broker unregulated finance products to limited companies, you sit outside the scope of the Financial Services and Markets Act 2000 and the Regulated Activities Order. That means no FCA authorisation, no AR agreement with a principal firm, and no supervision fees. CoreFi is built around exactly this model. Understanding where the boundary sits, and what changes when you cross it, is one of the most important decisions you will make before you launch.
The three routes explained
Unregulated and independent. If you restrict your activity to unregulated commercial finance products (such as unsecured business loans, invoice finance, asset finance, commercial bridging, and merchant cash advances) placed with limited company borrowers, you operate outside FCA regulation. You do not need an AR agreement, you do not need direct authorisation, and there is no licensing process to complete before you write your first deal.
Appointed representative (AR). An AR operates under the regulatory umbrella of a principal firm that holds its own FCA authorisation. The principal takes on regulatory responsibility for the AR's conduct and must supervise its activities. In return, ARs typically pay the principal a percentage of their revenue, an ongoing monthly fee, or both. This route suits brokers who want to place regulated products but do not want to run the full FCA application themselves.
Directly authorised (DA). A DA firm applies to the FCA for its own permissions. The application takes several months, requires a detailed business plan and compliance framework, and carries ongoing reporting and, for many activities, capital adequacy obligations. DA status gives you the most flexibility, and also the greatest regulatory burden.
When you need AR or DA status
The boundary is set by the product type and the borrower type, not by the size of the deal.
You will need either AR or DA status if you want to broker any of the following:
- Consumer credit to individuals (personal loans, hire purchase on personal vehicles, regulated bridging finance) - Residential mortgages, where advisers sit under a DA firm or an AR network and hold a CeMAP qualification - Start Up Loans up to 25,000 pounds to individuals, which are regulated consumer credit - Business finance to sole traders or partnerships in certain circumstances, because Article 36A(4) of the Regulated Activities Order can bring these borrowers inside the regulatory perimeter even for products that would otherwise be exempt
If your pipeline will include any of these borrower types or product types, resolve your regulatory status before you trade. Carrying out or arranging a regulated activity without the correct permissions is a criminal offence under the Financial Services and Markets Act 2000.
Why unregulated commercial finance to limited companies is different
The exemption that makes unregulated commercial broking viable comes from the nature of the borrower. A limited company is a legal entity in its own right. The consumer protection rules written for individuals do not apply 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 loophole or a technicality that could be closed at short notice. It is a deliberate feature of the UK regulatory architecture, 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.
The practical result is that a broker focused solely on limited company borrowers can trade legitimately and compliantly, and can start immediately, without waiting for an FCA application to clear or negotiating an AR agreement with a principal.
How to choose your route
Start with your intended product set and borrower profile.
If you want to focus on SME commercial finance to limited companies (CoreFi's primary model, and where much of the UK business lending volume sits), you do not need FCA permissions. You can launch as an independent commercial finance broker, keep full ownership of your business, and avoid the ongoing cost and compliance overhead of AR or DA status.
If you want to add regulated products such as residential mortgages or consumer credit, you have two main options: build those activities into a separate FCA-authorised legal entity, or take on AR status under a suitable principal for those specific permissions while keeping your unregulated commercial activity independent.
If you want to broker to sole traders or partnerships, take specific legal advice before you start. The position depends on the product, the borrower's purpose, and the applicable exemptions in the Regulated Activities Order. This is a narrower risk than it is sometimes made to sound, but it is not one to manage without qualified guidance.
There is no single right answer for every broker. The right answer is the one that matches your actual product set and borrower type.
What CoreFi provides (and what it does not)
CoreFi is a commercial broker platform, 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 is a complete operating infrastructure for unregulated commercial finance broking: a lender panel of specialist lenders, a deal CRM, document handling, a lender-matching engine, broker training, and commission splits from 55% (Associate) up to 70% (Partner), with no franchise fee and no minimum volume before you earn.
If your plan is unregulated commercial finance to limited companies, CoreFi is built for that model. If your plan includes regulated products or lending to individuals, sole traders or partnerships, you will need to resolve your regulatory position separately before placing those deals. We will be straightforward with you about that distinction, because getting it wrong is not a compliance inconvenience, it is a serious legal matter.
Frequently asked questions
Do I need to be an appointed representative to broker commercial loans?
Not for unregulated commercial finance to limited companies. Appointed representative 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.
What is the difference between an AR and a DA broker?
An appointed representative operates 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 routes matter only for regulated activities. If you restrict your work to unregulated commercial finance for limited companies, neither structure 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 separate their unregulated commercial finance activity into an independent entity. The structures are not mutually exclusive. Many brokers run a separate FCA-covered arrangement for regulated referrals and 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?
There is no mandatory qualification for 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 you start placing deals, though a thorough understanding of the products, lenders, and deal mechanics is essential to doing the job well.
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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