Is a merchant cash advance regulated by the FCA?
No. Merchant cash advances are not regulated credit agreements under the Consumer Credit Act 1974. That's because an MCA is not technically a loan. It's the purchase of future card sales. This page explains what that means for you as a UK business owner in 2026.
Last updated: April 2026
Why aren't MCAs regulated like loans?
The FCA regulates credit agreements under the Consumer Credit Act 1974. Regulated credit under the Consumer Credit Act typically involves lending money with interest, where the borrower takes on a debt obligation. MCAs are structured differently: the provider purchases a share of your future card sales at a discount. Because no money is 'lent' and there is no fixed repayment schedule, MCAs fall outside the CCA's scope.
An MCA is structured differently. The provider purchases a portion of your future card sales at a discount. There's no interest rate, no fixed repayment schedule, and no set term. Because of this structure, MCAs fall outside the scope of the Consumer Credit Act and therefore outside FCA regulation.
This is a factual legal distinction, not a loophole. It's how the product has been structured since MCAs were first offered in the UK market.
What protections are in place?
Just because MCAs aren't covered by the Consumer Credit Act doesn't mean there are no protections. Here's what applies:
Contract law
Your MCA agreement is a legally binding contract. Both parties have obligations and rights. If a provider doesn't honour the terms, you have legal recourse.
Data protection (GDPR)
All providers must handle your data in accordance with UK GDPR. They need your consent to process your information and must keep it secure.
Anti-money laundering (AML)
MCA providers must comply with AML regulations. This is why they verify your identity and business before approving funding.
Voluntary industry codes
Many reputable MCA providers follow voluntary codes of practice that cover transparency, fair treatment, and responsible lending principles.
Financial Ombudsman Service
While MCAs themselves are not FCA-regulated, if a provider is authorised by the FCA for other activities, in some cases you may be able to raise a complaint with the Financial Ombudsman, although this depends on the specific circumstances, the firm's regulated activities, and eligibility rules.
What to check before accepting an MCA
We always tell business owners to make sure they understand these five things before signing anything:
- Total cost: Advance amount multiplied by the factor rate. This is the total you'll repay.
- Holdback percentage: What percentage of your daily card sales goes towards repayment.
- Written agreement: Everything should be in writing before any money changes hands.
- Early repayment terms: Understand whether paying back faster changes the total amount owed.
- Who you're dealing with: Check the provider's Trustpilot reviews and how long they've been operating.
Where does CapExpand fit in?
CapExpand is an introducer. That means we connect businesses with lenders on our panel. We don't lend money, we don't make lending decisions, and we don't provide financial advice.
Transparency is central to how we work. CapExpand is not currently regulated by the FCA, and we're upfront about that. Our job is to save you time by comparing multiple providers and helping you understand your options. The lender pays us when funding completes. Our service is completely free to you.
For personalised financial advice, we'd always recommend speaking to a qualified financial adviser.
Frequently asked questions
Is a merchant cash advance a loan?▼
Technically, no. A merchant cash advance is structured as the purchase of future receivables, not a loan. The provider buys a portion of your future card sales at a discount. This is why MCAs fall outside the Consumer Credit Act 1974 and are not regulated by the FCA in the same way as loans.
Does that mean MCAs are unregulated?▼
MCAs are not regulated under the Consumer Credit Act, but they are not completely unregulated either. Providers must comply with general business law, data protection regulations, and anti-money laundering rules. Many also follow voluntary industry codes of practice.
What protections do I have as a business taking an MCA?▼
You are protected by general contract law, data protection law (GDPR), and anti-money laundering regulations. You should always receive a clear written agreement showing the advance amount, factor rate, total repayable, and holdback percentage before you accept. At CapExpand, we only work with established providers who operate transparently.
Is CapExpand regulated by the FCA?▼
CapExpand is an introducer. We connect businesses with lenders on our panel. We are not currently regulated by the FCA. We do not provide financial advice or make lending decisions. We are transparent about our role and how we are paid (by the lender, not by you).
Should I be worried about using an unregulated product?▼
The key is to work with reputable providers and understand what you are signing. Make sure you know the total cost upfront (advance x factor rate = total repayable), understand the holdback percentage, and read the agreement before you accept. A good introducer like CapExpand will explain everything clearly and never pressure you.
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“I was nervous about taking funding but they walked me through everything.”
“No surprise charges, and their fees are easy to understand.”
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