Mortgage Intelligence Compliance Update: Stranger Danger
Stephen Adams highlights the risks unregulated introducers pose for appointed representatives and directly authorised firms
A large proportion of fraudulent activity stems from business that was originated via unregulated introducers. This is not to say that everybody looking to introduce mortgage business to your firm is a fraudster. However, it is clearly the case that close attention should be paid by all appointed representative and directly authorised firms to individuals approaching them to introduce business.
At present there are a number of ex-advisers who have either been terminated by the FCA or removed from lender panels but still want to make money in the mortgage market. They are regularly approaching unsuspecting advisers and seeking to exploit any weaknesses in their due diligence checks. To protect your business you need to be sure that the individuals that you deal with are genuine, honest and ultimately do not put your career at risk.
If after completing your checks you are happy to proceed with an introducer agreement then it is strongly recommended that the relationship is put on a professional footing. A simple agreement, signed by both parties, to outline your relative responsibilities and limitations is a good way of setting up the business relationship. Any agreement you make should set out the terms of the arrangement, such as what product types will be referred, how the client is informed that an introduction has been made, how information is passed to you, how the agreed remuneration will work and how the agreement can be terminated. If the introducer is not keen to have an agreement of this type in place then you should certainly ask yourself why this would be.
By carrying out robust checks as part of your standard procedures for taking on introducers we believe that you will reduce the chances of dealing with fraudulent clients. Of course you could undertake all of the above and still be targeted by an individual who wants to commit fraud. Be sure to adopt a common sense check when dealing with introducers and customers. If you don’t feel comfortable with what you are being told then ask more questions, if you are still not comfortable after this then do not proceed. It just isn’t worth the risk to your business.
If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.