Consider this…In the early months, the FSA adopted a light approach in their regulatory regime. However, by their own admission, the honeymoon period is now over and firms that have not taken the time and effort to acquaint themselves with the full implications of the principles, rules and guidelines set out in MCOB and ICOB can expect a rude awakening


If you were to be selected for an ARROWE Assessment (a visit from the FSA), are you happy that you would be able to satisfy their requirements?

For example, do you have written procedures that evidence your compliance in all of these areas?

  • Senior Management Systems &
    • Controls: are you aware of the requirement to document and implement, where appropriate, the following procedures?
    o Organisation
    o Compliance
    o Risk Assessment
    o Management Information
    o Employees and Agents
    o Audit Committee
    o Internal Audit
    o Business Strategy
    o Remuneration Policies
    o Business Continuity, Records

  • Complaints: are all staff aware of the procedure for complaint handling? Do you have a written procedure to give to a customer making a complaint that sets out their rights and what they can expect of you? Are you aware of the minimum standards for responding to a complaint?

  • Treating Customers Fairly: can you show evidence that:
    o senior management deeply understand and have a shared view of TCF
    o TCF is regularly discussed at partner/board level
    o the firm has reviewed its strategy with TCF in mind
    o a clear and consistent set of TCF values exist
    o Employees and Agents
    TCF is one of the cornerstones of the FSA’s approach to regulation and forms a key part of their supervision and monitoring

  • Mortgage Sales Process: is the process clearly defined to ensure that you provide the most suitable recommendation to each customer?  Will your paperwork stand up to scrutiny by the Ombudsman if a complaint is made in the future?  Are you conversant with MCOB rules relating to debt consolidation?  Do your files provide full documentary evidence to support the reasons for your recommendations?

  • Financial Promotions: are your advertisements compliant?  How about your web site?  Who approves your financial promotions?
    • There are so many ways in which hard-working mortgage intermediaries, who are trying their best to operate compliantly and to provide a professional service to their customers, can fall foul of the rules, often unwittingly.  However, ‘ignorance of the law is no excuse’ although many firms still carry on as if the FSA doesn’t exist and that they will never get caught.  This is extremely dangerous as the penalties could be disqualification or a heavy fine (as several firms have recently found to their cost).

    Unless they have the financial resources to employ a full-time compliance officer, most firms really should consider subscribing to a professional compliance support service.

    First Mortgage Options’ Compliance Support

    Our compliance support is specifically designed to help firms (whether directly authorised or appointed representatives) to continue to write profitable mortgage and general insurance business but to do so compliantly.

    The training will highlight those areas where firms may be most at risk, whether that is a complaint from a customer or action by the regulator.

    Society is now steeped in a compensation culture and you are more likely to encounter complaints than ever before.  Indeed, many of the endowment claim-chasing firms are now switching their attention to mortgage and general insurance sales.

    Our objective is to show you how to minimise the chances of a complaint occurring and how to help maximise your chances of defending such a situation if and when it happens in the future.

    Our compliance service is too long to list here but the key components include:

  • Comprehensive training – the best documentation in the world is useless unless the people that need to implement it fully understand the implications and subscribe to the need for detailed procedures – we don’t just show you how; we also explain why…

  • Compliance manual – the FSA MCOB rules have been re-written in plain English.  The manual also includes numerous useful documents to help protect your business

  • Training & Competence manual – the requirements for evidencing competence and for supervision and monitoring of advisers
  • Document templates - 30+ document templates (in MS Word format)
  • Telephone Help Desk – unlimited assistance
  • Periodic consultancy visits - and file checking
  • Regular compliance updates – as necessary
  • Advertising assistance – for financial promotions
  • Complaints consultancy – if needed
  • Full access to all of FMO’s products and services – arguably the broadest range of products and services in the industry – and with market leading procuration fees and commissions

    • The compliance support service is headed by our Director of Compliance, David Espin, previously a mortgage broker himself but also, importantly, is a former Compliance Inspector with MCCB so you will have the significant benefit of his extensive knowledge and experience in this highly specialised area.

    Costs of Compliance Support

    For Directly Authorised Firms
    For firms with up to 3 advisers (qualified or trainees), we charge just £110 per month for our professional mortgage and general insurance compliance support package as described above.  This increases to £160 per month for firms with between 4 and 7 advisers).  Please apply for costs for larger firms.

    For Appointed Representatives (via Your Mortgage Options)
    For firms that wish to become a member of a network, our sister company Your Mortgage Options provides a unique service.

    FMO/YMO has always sought to advance the interests of independent mortgage brokers and IFAs and to provide the best possible service to those firms that wish to retain control of their own affairs.

    We do not try to strictly limit our client firms to a narrow panel of lenders or insurers but to provide flexibility in terms of the products and services available to customers.
    In addition, if you join us initially as an appointed representative but later wish to move towards direct authorisation, we will help and encourage you.  This means that, as a directly authorised firm, you will be free to place business wherever you wish so, if we are to retain any of that business, we will need to provide you with the best service and commissions, a challenge we readily accept.

    Alternatively, we find some firms prefer, after having had to deal with the FSA directly for a couple of years, prefer to ‘give up’ the extra administration and join us as they feel our professional approach to business most closely matches their own.
    In addition to the service items listed above, we provide the following for appointed representatives:

    • Professional Indemnity Insurance
    • 100% file checking – to help ensure maximum protection
    • Trigold Optimiser mortgage sourcing system
    • Fully defined compliance paperwork and procedures
    • Supervision and monitoring
    • Access to the complete range of FMO products and services, including secured loans, commercial loans, conveyancing, fully functional web site with links to a variety of unique product providers, enhanced commissions from a range of providers

    Compliance costs for Appointed Representatives
    The cost of compliance support for appointed representatives starts from £110 per month (for up to three advisers) plus a turnover charge of 10% of regulated income (this percentage reduces at higher turnover levels)* – we do not deduct the turnover levy for non-regulated business (e.g. Buy-to-Lets, secured loans, commercial finance, etc.)

    For firms with between four and seven advisers, the monthly standing charge increases to just £160.

    Mortgage Assess (an online e-learning and competency assessment system from the Personal Finance Society) is charged at £12 per adviser per month. Please enquire for the costs of firms with eight or more advisers.

    *Note: we routinely pay some of the highest procuration fees in the industry so the net fee you will receive from YMO is actually higher than that from some networks that purport not to make a percentage charge!

    If you value your business and want to deal with people who strive for the highest professional standards in all that they do – in other words, people that aim to provide the same level of service to you as you do to your own customers – then the obvious choice is First Mortgage Options

    First Mortgage Options
    0845 129 5022
    Email: compliance@firstmortgageoptions.com