Head of Compliance, Stephen Adams, discusses what the mortgage and protection adviser industry has learnt following the Carey Pensions court case.
The Royal Court in London heard claims from an investor in late March that a self-invested personal pension (SIPP) provider, Carey Pensions, had colluded with an unregulated introducer to push retirement savers into high-risk unsuitable investments, where they lost as much as £3m. Carey Pensions denied the claims. But The Financial Conduct Authority has reiterated to providers and advisers the weight of regulation is on them when accepting business from unregulated individuals and companies.
A large amount of fraudulent activity comes from business that originated via unregulated introducers. This doesn’t mean everyone trying to introduce mortgage business to your firm is a fraudster. But, it is imperative that all appointed representatives and directly authorised firms pay close attention to individuals approaching them to introduce business.
Some ex-advisers that have either been terminated by the FCA or removed from lender panels are still trying to make money in the mortgage market. They may approach unsuspecting advisers seeking to exploit any weaknesses in their due diligence checks. To protect your business you must make sure that the individuals you deal with don’t put your career at risk. The FCA takes a rigid stance in terms of responsibility:
“The onus is on the authorised firm which accepts business from an introducer to meet its regulatory requirements”.
But, if it is your responsibility and if after your checks you are happy to proceed with an introducer agreement then the relationship should be made professional. An agreement should be drawn up that outlines your relative responsibilities. This should be signed by both parties and 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 your introducer is reluctant to sign such an agreement, you should ask yourself why this is could be. Appointed Representatives of Mortgage Intelligence must use our Introducer Agreement and Introducer Checklist documents.
We believe carrying out in depth, robust checks as part of your standard procedure when taking on introducers will reduce your chances of working with fraudulent clients. However, regardless of how careful you may be you can still be targeted, so be sure to adopt a common sense check. And ultimately, if you don’t feel comfortable do not proceed – it isn’t worth the risk.
“As Head of Compliance, I know that providing an approachable and professional service for all our brokers enables them to provide high quality and professional advice to their customers, which is key to the success of our network”