Is invoice finance regulated by the FCA?
Not for limited companies. The FCA (Financial Conduct Authority) only regulates credit given to individuals, which includes sole traders, and to small partnerships and some other unincorporated groups. Even then, business credit over £25,000 is exempt. So a facility for a limited company is not regulated, and one for a sole trader or small partnership can only be regulated if it is £25,000 or less and counts as credit.
Who is covered
| Your business | Can the facility be FCA regulated? |
|---|---|
| Limited company or LLP | No |
| Partnership of 4 or more partners | No |
| Partnership of 2 or 3 partners (not all of them companies) | It can be, if the credit is £25,000 or less |
| Sole trader | It can be, if the credit is £25,000 or less |
Sources: a regulated credit agreement must be with "an individual or relevant recipient of credit" (Regulated Activities Order, article 60B). A relevant recipient of credit is a partnership of two or three persons not all of whom are companies, or an unincorporated body that is not a partnership and is not made up only of companies (article 60L). Credit over £25,000 taken wholly or mainly for business is exempt (article 60C(3)). Read 11 October 2026.
If you are a sole trader or small partnership looking at a facility of £25,000 or less, ask the lender whether it is regulated and get the answer in writing. See also invoice finance for sole traders.
Where to complain
If your facility is not regulated, you may not be able to use the Financial Ombudsman Service. Danske Bank's complaints page, for example, says the Ombudsman "won't consider complaints about invoice finance agreements", though it may look at wider regulated services with an invoice finance element.
There is a separate independent complaints process for invoice finance and asset-based lending, set up by UK Finance (the banking trade body) and decided by an adjudicator from CEDR (a dispute resolution service). According to CEDR:
- It covers factoring, invoice discounting and asset-based lending from lenders that are UK Finance members.
- You complain to the lender first, within 12 months of the problem.
- If that does not settle it, you register the complaint with UK Finance within 6 months of the lender's final response.
- The claim must be for £50,000 or less (£28,000 or less for events before 1 January 2021).
Ask your lender whether it is a member before you sign. If it is not, your options are the lender's own complaints process, mediation or the courts.
Before you sign
You can check what a lender is authorised for on the FCA register. The contract terms that matter most are covered in how long invoice finance contracts last, personal guarantees and how to leave a facility cleanly.
Common questions
The lender says it is FCA authorised. Does that make my facility regulated?
No. Many lenders are authorised for other products they sell. That does not bring an unregulated business facility under FCA rules. Check the FCA register to see what a firm is authorised to do.
What does invoice finance mean?
It is money a lender pays you against invoices your customers have not paid yet. The two main kinds are factoring, where the lender collects payment from your customers, and invoice discounting, where you collect it yourself.
If my facility is not regulated, what protects me?
Mainly the contract. Read the notice period, the fees for leaving, any minimum charges and any personal guarantee before you sign, and get advice if anything is unclear.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
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