Credit Broker
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In business and law, a credit broker is a company or individual that deals in
broker A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
age of
consumer credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt ...
. Essentially a credit broker links somebody looking for consumer credit, a debtor with a company or individual willing to provide it, a creditor, normally for a commission. Credit brokers include
mortgage broker A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses. Traditionally, banks and other lending institutions have sold their own products. As markets for mortgages have become more competitive, ...
s and loan brokers. The commission normally comes from the individual or institution offering credit, and the broker is therefore not entirely objective. Some credit brokers also levy a separate charge on the person looking for credit, without the knowledge of the offering institution. In
British law The United Kingdom has four legal systems, each of which derives from a particular geographical area for a variety of historical reasons: English and Welsh law, Scots law, Northern Ireland law, and, since 2007, purely Welsh law (as a result of ...
, credit brokers are covered by the Consumer Credit Act 1974 and the Consumer Credit Act 2006, which defines a credit broker not just as a mortgage or loan broker, but also as a vast range of other intermediary bodies such as car dealers, shops that introduce customers to financial houses for
hire-purchase A hire purchase (HP), also known as an installment plan, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment (e.g., 40% of the total) and repaying the balance of the price of the asset pl ...
agreements and solicitors who negotiate advances for non-corporate clients. Under the 1974 Act, such businesses require licenses from the Office of Fair Trading. If the business is unlicensed, any agreements made are considered "tainted". In this situation, agreements are only enforceable with a direct order from the Director General of Fair Trading. In addition, the unlicensed trader also commits a criminal offence. This only comes into effect if enforcement is sought through the courts, however; it has been pointed out that agreements can still run their course regardless of the status of the broker. In certain situations under the 2006 Act, credit brokers become agents of the creditor.MacIntyre (2008) p.431


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* * * * *{{cite book, last=Macleod, first=John , title=Consumer sales law: the law relating to consumer sales and financing of goods, publisher=Routledge, year=2002, isbn=1-85941-700-0 Financial services occupations Credit