Lender vs Broker — What is the Difference?
When you apply for credit, the firm you apply through is not always the firm that provides the money. Understanding the difference between a lender, a broker, an introducer and a comparison site can help you know who is responsible for what — and who you actually owe money to.
General guidance only. This page provides general information. It is not regulated financial or legal advice. Always check FCA authorisation at register.fca.org.uk before using any financial service.
The Key Types Explained
Lender
Provides credit directly to you
A lender is the entity that actually provides the money — the credit. If you take out a personal loan, credit card, car finance or mortgage, your lender is the organisation you sign the credit agreement with, and the one you make repayments to. Lenders must be FCA-authorised for consumer credit.
Examples: Banks, building societies, specialist finance companies, car finance providers, buy-now-pay-later companies.
Regulation: Must be FCA-authorised.
Credit Broker
Introduces you to lenders — does not provide credit itself
A credit broker acts as an intermediary. It collects information about your needs and circumstances and introduces you to one or more lenders who may offer credit. The broker does not provide the credit itself. Credit brokers are FCA-regulated and must disclose that they are a broker, not a lender.
Examples: Loan comparison platforms, car dealership finance departments, mortgage advisers, some price comparison websites.
Regulation: Must be FCA-authorised or an Appointed Representative.
Finance Introducer
Passes your details to a lender or broker
A finance introducer passes on your details or your enquiry to a lender or broker but does not arrange the credit or provide financial advice. Some introducers operate as Appointed Representatives of an FCA-authorised firm; others may not need direct FCA authorisation depending on their activities.
Examples: Some lead generation websites, comparison sites that hand off to brokers, some retailers.
Regulation: Regulation varies — always check the firm's FCA status.
Comparison Site
Displays and compares products from multiple lenders
A comparison site aggregates products from multiple lenders or providers so you can see and compare them in one place. The comparison site is not your lender. If you proceed with a product, you are entering an agreement with the lender, not the comparison site. Comparison sites that facilitate applications for regulated credit products must be FCA-authorised or appointed.
Examples: Price comparison websites covering loans, credit cards, mortgages or insurance.
Regulation: Must be FCA-authorised or appointed if facilitating regulated credit applications.
Who Do You Owe Money To?
You owe money to your lender — not your broker.
Even if you applied through a broker, a comparison site or a dealership, your repayment obligation is with the lender named on your credit agreement. That is the company you make payments to, the company that can report missed payments to credit reference agencies, and the company that can take legal action if you do not repay.
If your original lender later sells the debt to a debt purchaser, the debt purchaser becomes the entity you owe money to. You should receive a "notice of assignment" if this happens. Your rights under the original credit agreement do not change as a result of that sale.
Commission — What You Should Know
Credit brokers typically earn a commission from lenders for introducing customers. FCA rules require credit brokers to disclose to you that they may receive a commission for arranging credit for you.
In some markets — particularly car finance — commission arrangements between dealers and lenders have been the subject of significant regulatory scrutiny and consumer redress reviews. The FCA has reviewed certain commission structures where the broker's commission was linked to the interest rate you paid.
If you want to know whether a broker is receiving commission and how much, you are entitled to ask. FCA-regulated brokers must respond honestly to that question.
Frequently Asked Questions
What is the difference between a lender and a broker?
A lender provides credit directly to you — they are the entity you owe money to if you take out a loan, credit card or finance agreement. A credit broker does not lend money itself; instead it introduces you to lenders who may be willing to offer credit. Both lenders and credit brokers must be FCA-authorised to deal with UK consumers.
Does a credit broker have to tell me about commission?
FCA-regulated credit brokers must disclose if they will receive a commission for introducing you to a lender, and in some circumstances must disclose the amount. This is particularly relevant in markets like car finance, where commission arrangements have been the subject of FCA review and enforcement action. Always ask if you are unsure.
Do I owe money to my broker or my lender?
You owe money to your lender, not to the broker. The broker arranges the introduction but the credit agreement — and your repayment obligation — is with the lender. If your lender sells or assigns the debt, a different firm may become the entity you owe money to (a debt purchaser). The broker is not a party to your ongoing credit agreement.
What is a finance introducer?
A finance introducer passes your details to a lender or broker but does not arrange the credit itself. Some introducers are FCA-regulated (as Appointed Representatives of an authorised firm); others may operate in ways that do not require their own FCA authorisation. Always check the firm's FCA status before sharing personal or financial details.
Is a comparison site a lender?
No. A comparison site shows you products from multiple lenders or providers to help you compare them. It is typically either a credit broker (if it facilitates applications) or a financial promoter (if it only compares). A comparison site does not provide credit to you — the lender you select does. Comparison sites that facilitate regulated credit products must be FCA-authorised or an Appointed Representative.