With lenders being more and more risk adverse when it comes to evidence of income, it is important to ensure you are reviewing the documents and can identify potential issues and seek clarification before you proceed.

So, what are the most common areas we see on a payslip that could cause a lender concern?

• Net Pay. Does the net pay match what is being paid on the bank statement? This will almost never be different and if it is, you should ask for an explanation and evidence if available.
• Payment Method.  Is the method of payment the same on the payslip as the bank statement? Payslips will confirm how they will be paid, i.e. BACs, CASH or Faster Payment and this should then match the bank statements. If this doesn’t the lender will almost certainly question this.
• ​Employee Number. Most payslips will have an employee number on them, this is usually given in order of when people joined the firm, so if someone has an employee number of 1, this will normally indicate they are the owner. A quick check can be to look at the employees start date and look at when the company was set up on Companies House. For example, if someone joins a company that has been in place for a number of years, their employee numbers will be quite high.
• Pension Contributions. Most people will have pension contributions included in their payslip, although, people can opt out of this. So, if you see this, ensure you are asking to a reason why.
• Consistency. Payslips will almost always look consistent between months, unless the company has changed software. Therefore, you should be looking out for differences between the payslips you have been given.

Look at the example below and see if you can spot anything that you would query?

Did you spot it? 

Considering this is a payslip for the same company for the same week, they should match, but they don’t.

1. In the Rate/ Hours section, one has the Basic Pay and number of hours, and the other is blank. Considering this is the same company, the two documents should be identical.
2. In the payments section, one has the wording Total Hourly Pay and the other just has Basic Pay. If this wasn’t a joint application, this would be very difficult to spot, so you do have to pay close attention.
3. The other issue with this, although you could not spot it, was the fact that the pay method for both was Cash, however, if you reviewed the bank statements, you could see they are paid via bank transfer.

These differences, without any explanation from the adviser, were enough for the lender to decline this case.

If you are ever unsure, you can always ask for copies of their tax documents from the Government Gateway which confirms the amount of tax and NI they pay per month, if this matches the payslips, this will help confirm the pay is genuine, but it isn’t a guarantee.

If you are ever unsure, you can always ask a member of the Compliance department who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

In recent weeks we have introduced several important OMS updates, and more are in the pipeline for the coming weeks.

Recently we updated the process of moving stages within a case. To ensure that the appropriate fields within each stage are completed, such as advice and offer fees, advisers can no longer skip stages. Instead, each stage must be completed in order and with the relevant tasks updated.

So long as the stages are being completed at the correct time, OMS will now automatically pre-populate the date fields for you, such as

• DIP date
• Application date
• Offer Date
• Completion Date

These changes have made it even more important that advisers set up cases at the appropriate times and follow the stages correctly. Once you have moved a stage forward, you will not be able to move it backwards.

Another big update we have introduced is the product specific file checks. Previously, the file checks would have had tabs for every possible product, but now you will only see questions that relate to the appropriate product.

If you have an older case, your file check may appear to have been removed, but this isn’t the case. All old, completed file checks are still within the file check tab, but are saved in the tab called OLD.

It remains important to set cases up correctly and move them along at the appropriate stage, failure to do this can result in a Network breach, but breaches are easily avoided.

What is a breach?

To avoid anyone getting an email from Compliance that isn’t a nice one, I just wanted to highlight some areas that are considered a breach and let you know what you can do to avoid this.

• Submitting an application to a lender without creating a case on OMS.
• Submitting a case to a lender without having the case checked by Compliance (only for Blue advisers)
• Submitting a case outside of your permissions
• Not completing compliance file check remedials within agreed timeframes
• Not completing your annual Fit and Proper assessment or your annual Observations

There are many other areas that could be considered a breach, but these are the frequent areas we see that advisers sometimes fall foul of.

So, what can you do to avoid a breach?

1. Firstly, ensure you create a new case on OMS at the beginning of the process and before you are ready to submit your DIP.
2. If you are submitting a regulated case such as a Residential mortgage, Consumer BTL, Regulated Commercial or Bridge loan or a Protection Case, and your adviser status is BLUE, your case will need to be checked and approved by Compliance before you submit your application.
3. Ensure you have the appropriate permission before you submit a case. The most common mistake we see is advisers submitting a regulated BTL, Commercial or bridge loan without regulated permissions. To obtain this you will first require a CeMAP (or equivalent) qualification and to have attended the residential training course and passed the subsequent observation.
4. For each file check completed, Compliance will advise you of the required time to complete the remedial action. If you are unable to complete this within the timescales, please ensure you communicate with the team and in some situations, an extension can be given.
5. Compliance will contact you one month in advance to complete your Fit and Proper and Observations, ensure you complete the required actions within the timeframe given. Not only is not completing your annual Fit and Proper a network and regulatory breach and will result in your access to OMS being restricted until you have completed the appropriate action.

If you have any questions on any of this, please feel free to contact Compliance

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

To further enhance our file checking process and to allow advisers who specialise in non-regulated, or business buy-to-let (BBTL) advice the ability to submit their own DIPs and applications without the requirement to use the Case Management team, the Compliance Department will now be conducting 100% file checking on Business BTL cases for advisers who have not yet achieved Green adviser status.

This will commence from 14th October 2024.

Whilst we already conducted sample checks on these cases, we did not have a formal process in place to allow advisers the ability to submit their own cases. But we do now.

This new process will work in a similar way to that of the file checking and DYA process for Residential mortgages. Any advisers with a Blue or Yellow adviser status will be subject to 100% file checking until they have evidenced competence with the Networks requirements and achieved Green status. Once Green status is achieved, files will then be reviewed on a quarterly basis and advisers will be given the permission to submit their own DIPs and Applications.

We will check BBTL cases post application, so there is no need to send your cases into Compliance. We will instead review all cases submitted and conduct our file review within a specific timeframe or SLA. Feedback will then be given to the adviser in the same way as we do with residential file reviews.

The amount of file checks needed before achieving Green status will differ depending on whether you are an Academy or Experienced.

• Academy advisers will have a minimum of four cases checked
• Experienced will have a minimum of two files reviewed.

So long as these meet the Networks requirements for Business BTL, advisers will be given the ability to submit cases directly to the lender without the use of the Case Management team.

For guidance on the documents required for your BBTL cases, please refer to the minimum documentation Process in BOX HERE

For full guidance on the DYA process for Business BTL cases, please refer to the​ Operations Manual Here​ or, contact the Compliance Department who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Changes will happen with every business, such as new starters and leavers and when this happens, it is important to keep us informed. Connect are always on hand to provide support with your business needs and can help you with ensuring the process runs as smoothly as possible.

What should you do if you are looking at recruiting a new adviser?

In fact, you should notify us when you are recruiting any members of staff, this could be an adviser, an administrator or even a new controller.

When you are considering recruiting a new member of staff, you should discuss the options with our Business Recruitment Manager, Tracy Robinson tracy@connectmortgages.co.uk

Tracy will discuss all the options with you and let you know what the process is and what information we will need.

Tracy will also discuss any costs and what training Connect offer, which is free of charge for existing firms.

It is also important that we are advised of any new starters so we can complete the required background checks and ensure that your new starter is not a risk to your business.

What should you do if someone has left your firm?

It is also just as important to notify us when someone leaves your firm. This way we can ensure that all system access is removed, and you are paying the correct membership fees.

If someone has left your firm but we haven’t been advised, they will keep their system access and permissions, meaning they could continue to do business under your companies’ authority and name.

If someone in your company is looking to leave, please contact our Compliance Department compliance@connectmortgages.co.uk

Once we are notified of the resignation, we can begin our leavers process, which involves:

• Removal of system access
• Updating membership fees
• Updating the FCA register

If you have any questions or would like to discuss any of the above further, please do not hesitate to contact the Compliance Department, who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

When the FCA launched Consumer Duty on 31st July 2023, their goals were to see reduced consumer harm and better outcomes for consumers, outcomes such as:

• Justified and consistent fees based on the products provided.
• Better treatment for vulnerable customers
• Reduced complaints relating to mis-selling

However, research conducted suggest that Some 84% of consumers say there has been no difference in the service they receive from financial providers since Consumer Duty launched.

A desire for human interaction

Consumers said they were most frustrated by the lack of access to human support, this was the view of 48% of people who took the poll.

The poll also identified that 24% complained about financial service providers over-reliance on chatbots.

This is why at Connect we have always emphasised that AI and chatbots are a great way to give customers and staff quicker access to information, but that ‘the human in the loop’ was essential to not become over reliant on this technology and to still give people that human interaction that is so very important.

An email is quick and easy, but it can’t replace a phone call for relaying information and keeping people feeling informed.

So how has Consumer Duty impacted Vulnerable Customers?

Short answer, YES

Last week our Case Management team submitted an application and received an offer from the lender almost instantly.

But how is this possible?

A number of lenders now have AI underwriting, meaning once you have completed the application and packaged the case, the system will review all the information instantaneously and if all is correct, an offer can be produced immediately.

Accuracy of information is vital for this process to work, as any mistakes will be identified by the AI underwriter and will result in a manual review. This will then significantly increase the time to completion.

Now, I am not saying you have to use Case Management for this to happen, but having someone that knows what the lenders want and is diligent in reviewing a case for all the required information before the application is submitted can really help.

Being able to tell an adviser what further information is required and being able to spot any errors, no matter how small, is vital in ensuring the application has the best chance of being accepted. This is all part of the service of the Case Management team and that experience can really help reduce timescales and prevent delays.

Then, once the application is submitted, they do all the chasing and ensure that you are kept in the loop until the case is completed.

Having someone take the reins for you not only reduces the workload on yourself but allows you to move on to new customers. This is the biggest benefit of using the Case Management team.

Just think how happy your customer would be if you were able to give them an offer as quickly as this.

If you need any further information, please contact the Compliance Department who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

As the sun shines longer and the summer months wind down, the real estate market typically sees a surge in mortgage applications. Many prospective homeowners aim to secure their new homes before the long, dark nights set in. With this seasonal uptick, lenders are ramping up their efforts, enhancing their systems and processes to streamline the application-to-offer timeframe. In some instances, lenders are now issuing offer letters as quickly as the next day, a significant advancement that benefits both buyers and their agents. However, this swift pace does pose challenges, especially for compliance teams who must ensure all regulatory and procedural standards are met.

The Challenge of Compliance

When a case is reviewed by the Compliance Team, whether pre or post-application, any identified remedial work must be completed within 48 working hours. Unfortunately, there has been an increasing number of brokers who fail to meet this 48-hour deadline, leading to unnecessary follow-ups and delays. This lapse in compliance can have serious repercussions. If a case has unresolved remedial issues, it could be at risk of being withdrawn to avoid complications for the broker or the network. Even after an offer has been issued, lenders retain the right to withdraw it if new information surfaces. Additionally, lenders conduct post-completion checks, particularly concerning income verification. Cases have been cancelled when the income declared at the application stage was found to be reduced or unsupported at drawdown.

Best Practices for Brokers

To ensure a smooth process and avoid potential pitfalls, brokers should adopt the following best practices:

1. Verify Documentation: Ensure that the documents provided, such as pay slips, match the bank statements. If discrepancies arise, seek additional supporting evidence, such as an HMRC Taxable Income Listing, a letter from the employer, or a copy of the employment contract.
2. Confirm Identity Documents: Check that identification documents are signed and current. For driving licenses, verify the place of birth; if it is outside the UK, provide proof of residency.
3. Adhere to Deadlines: Complete all remedial work within the 48-hour timeframe. If you anticipate any delays, contact the Compliance Supervisor who sent the initial email and provide an update. Do not leave notes on OMS, as these will not alert the team to the issue.
4. Stay Informed: Keep abreast of the latest compliance updates. Regularly check the Network’s communications or log in to LMS and click on the Compliance Updates tab to stay informed of any changes or new guidelines.

Conclusion

As the market heats up and more clients seek to finalize their home purchases before winter, it is crucial for brokers to stay vigilant and compliant. By adhering to these guidelines, brokers can ensure a smoother application process, reduce the risk of delays, and maintain a positive relationship with lenders. Keeping up-to-date with compliance requirements and promptly.

If you need any further information or clarification, please contact the Compliance Department who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

There are, however, occasions where we are unable to pay commission as quickly as we would like. So here is some guidance on what could cause your commission payment to be delayed.

When commission is received, our Finance Department will first look to find an OMS case to match it to, so when there isn’t a case set up on OMS, no commission can be paid until this is done.

When a case is set up on OMS, that case must have the minimum required amount of information on for us to be able to release your commission. We do this to ensure each case meets the Networks expected standards with regards to quality and so we have sufficient customer information to ensure we are paying the commission correctly.

So, in order to avoid delays and ensure you receive your commission within 3 days, here is a list of requirements that we look for:

For a Mortgage case

• Minimum Documents Attached: Ensure all required documents, including the offer, are attached as per the minimum required documents process HERE.
• Correct Case Stage: Ensure that the case is in the correct stage using the OMS workflows.
• OMS Updates: Application submitted, and case completion dates must be entered into OMS.
• Compliance Check: For advisers not signed off on residential advice, ensure the case has been reviewed by compliance.
• Protection Your Needs Tab: Complete this tab for all regulated cases.
• Adviser Fees: Enter the fees the adviser is charging into either the estimated fees section on the loan details tab or the adviser fees & commission tab.

For a Protection case

• Correct Case Stage: Ensure that the protection case is in the correct stage using the workflows on OMS.
• Insurance Reference Number: Ensure that the insurance reference number is entered into the OMS.
• On Risk Date: Enter the on-risk date into the OMS.
• Documents Attached: Attach all required documents to the case file as per the Protection Process Guide HERE

Full guidance on this policy

Full guidance on this policy can be found in the operations manual, HERE

As with all our policies, there are occasions where we are required to make amendments, so this list may evolve over time.

This is not an exhaustive list of what is required on each case, for this, please ensure you are reviewing and completing the file check tab on OMS.

If you need any further information or clarification, please contact the Compliance Department who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

The Equity Release Council has introduced a new testing requirement for all of its members. This test must be completed each year to maintain membership and to ensure your knowledge remains current.

We have uploaded this test to the LMS system, and any adviser with Equity Release permissions will be allocated this training to complete. If you do not have Equity Release permissions, you will not be assigned this training.

The test contains only 15 questions, so it will not take long to complete. However, there is a requirement to achieve at least 75% on the test.

So, when does this need to be completed by?

For those who are required to take this test, the deadline set on LMS will show as the 31st of October 2024. Additionally, Equity Release Council members will need to confirm that they have successfully completed the test when they renew their Equity Release membership.

How will I know if I have to take the test?

This test will only be allocated to advisers with Equity Release permissions. If you are unsure whether you have these permissions, you can check your permissions certificate provided by our member support team. If you do not have this certificate, you can contact member support to request another copy: membersupport@connectmortgages.co.uk.

Also, when we allocate this training to your LMS training page, you will receive an email notification to inform you that the training is now ready to complete.

If you have any questions, the Equity Release Council have created a frequently asked questions section, that you can read HERE

They have also created further help for members of the Equity Release Council that can be read HERE  

Should you have any questions on this, please do not hesitate to contact myself or the compliance team.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

In July 2023, the FCA’s Consumer Duty rules came into force.

Consumer Duty has been described as the ‘biggest overhaul for the UK’s financial services industry in 20 years’.  But what actually changed and what have we learned a year on?

The FCA introduced ‘The Four Outcomes’:

• the governance of products and services
• price and value
• consumer understanding, and
• consumer support

These four outcomes represent key elements of the firm-consumer relationship and were the main areas that we were required to review within our own processes.

If you would like to read more about the FCA Consumer Duty rules, you can read it HERE

Taking into account the requirements of the FCA, we then began the difficult task of ensuring that everything we do as a network met  these new requirements.

Following a review of all our policies, processes and customer communications, we made many changes to how we operate, ensuring the customer was at the heart of each decision.

Some of the main changes we made were:

• Introduction of Connect’s Fee Policy, that set out what we believe to be fair charges for customers to receive for each product type.
• We updated all our policies to ensure they were compliant with the new rules.
• Updated our Terms of Business.
• Updates to OMS to strengthen our Vulnerable Customer process.
• Enhanced our protection process to ensure all our customers receive an appropriate conversation.
• Created a suite of reports to monitor customer outcomes.

So, how has the industry changed one year after Consumer Duty?

Whilst lenders were already monitoring broker fees, this year we have seen more pushback to Networks and brokers where they see fees to be excessive and above what they deem to be appropriate.

Some lenders were already sending reports of cases where a fee is being charged above 1% and asking for our justification, we have now seen lenders set fixed limits on what they will accept. This represents a massive change in the Lender, Broker relationship and something we must work closely together on to ensure that there is no customer detriment. Worst case scenario could be that brokers avoid using certain lenders due to the fee limits they have, this is something we must look to avoid to prevent foreseeable harm to customers.

What can brokers do to remain compliant with the rules?

1. The treatment of vulnerable customers was a big part of consumer duty, and we must ensure that customers are not disadvantaged by our processes or communication. Therefore, if you have a customer that may be vulnerable, please make sure you record this on OMS and ensure you are talking to them about how their vulnerability may affect them and what you can do to help? Further guidance on this can be found in our Vulnerable Customer Policy HERE
2. Ensure your fees are in line with the Networks Fee Policy and you are recording your fees in OMS. Connect’s Fee Policy can be found HERE
3. Completion of the ‘Insurance Your Needs’ tab is important whether you have protection permissions or not. This part of the fact find helps identify where there may be a need for protection. The identification of a need is part of avoiding foreseeable harm. If you identify a need, you will then either provide the advice yourself, or refer to someone who can do it for you. Connect provides training on Protection each month which for network members is always free. You can book yourself on any training course by accessing the training hub HERE

Like TCF, this is not a ‘One and Done’ exercise. Consumer Duty is an ongoing process, and we must continue to review everything we have in place to ensure it remains appropriate and meets on the ongoing requirements of the FCA. What we saw as appropriate last year, may not be appropriate this year, therefore, we may make further changes. However, these will always be communicated so our network members are fully aware.

Should you have any questions on this, please do not hesitate to contact myself or the compliance team.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Compliance has checked 500 cases so far this year, so what are the trends that we can learn from?

Last year we enhanced our file checking process and introduced some new initiatives:

• Phone calls to deliver file check feedback
• Heads up process to help new (BLUE) advisers with their learning journey
• Improved file checking scoring system
• Compliance 1-1’s

So far, our new approach has been well received and we have seen an increase in the amount of advisers achieving Competent Adviser Status (CAS). But as well as this we are seeing less repeat mistakes and a steady improvement in the overall file quality.

From the 500 cases, what scores do we typically see?

If you were not already aware, below is what the gradings mean:

• 6-Green  Advice is suitable, and the file is complete with no missing documents or information.
• 5-Green Advice is suitable, but there are minor fact-find omissions or document omissions (not minimum standard documents) but the omissions are not affecting the advice.
• 4-Amber  Advice is suitable, but some documents evidencing advice are missing, or the suitability letter is presented with minor omissions.
• 3-Amber  Advice is suitable, but one or more company standard minimum documents are missing, or the suitability letter is presented to the customer with material omissions on the recommendation, requiring re-issue.
• 2-R​ed Unsuitable advice, eg. mortgage unaffordable, product does not suit customer needs, justification for the advice is not clear.
• 1-Red  Suspected fraudulent case, e.g.Back door residential, staged income, fraudulent documentation etc.

So, the typical score we see files graded as is Amber 3, which 50% of the cases checked have been graded, this means that the advice is good, but the cases require some amendments or there are some missing documents. However, it is also worth noting that 33% of cases are graded Green, which shows that generally case quality is very good.

If you are unaware of what the minimum standard documents are, there is a process in the Operations Manual in BOX HERE

What trends do we see from file checks that are making cases Amber?

Missing documents is the biggest reason for seeing Amber cases, the main documents being:

• Incomplete or missing proof of deposit, especially with gifted deposits
• Sanctions Searches not being completed
• Missing Credit Reports
• Insufficient Proof of Income, such as missing payslips
• Fees being charged that are higher than Connect’s fees tariff. If you are unsure of what Connect’s fees tariff, you can read it HERE

We also see a number of Terms of Business (TOB) that are old versions. We will from time to time update documents within the Operations Manual; therefore, it is important that you refer to these in each case. We have recently updated our Terms of Business, so please ensure you are using the latest version.

The easiest way to pass a case is to use the File Check tab on the case, this will cover all of the documents and other requirements you need to pass a case.

Should you have any questions on this, please do not hesitate to contact myself or the compliance team.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Most people have heard of the term vulnerable customers, and even know what type of people may be classed as vulnerable, but do you know what to do when someone is identified as vulnerable?

Before we cover what help can be given to vulnerable customers, let’s look at who might be vulnerable and the scale of how many people are actually classed as vulnerable.

The FCA definition of vulnerable

A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

For the FCA’s full guidance on vulnerable customers, please read HERE

Vulnerability can come in many guises

Many people assume vulnerable people refers to the elderly or disabled, but in fact, vulnerability can come in many guises, such as:

Age (young and old): Someone who is young could be vulnerable due to having less experience in life making them more susceptible to fraud or manipulation. Someone who is old, or just older than the person they are talking to may struggle with terminology or technology.

Mental health: In any given year, one in four adults experience at least one mental disorder and may then find it difficult to deal with their finances. You may see erratic spending on their bank statements or missed payments on their credit report.

Physical health: 16% of working age adults have a disability. This may result in them finding it difficult to so simple tasks such as post a letter or answer the phone.

Low literacy: One in seven adults has literacy skills that are expected of a child aged 11 or below. Many people are having to talk to brokers in their second language and may struggle to understand important parts of the mortgage advice process.

Life changing events: Such as illnesses to themselves or a family member, or are going through a divorce or the even the death of a friend or family member. These events could result in unusual behaviour such as anger or crying over the phone.

Caring responsibilities: More and more people have caring responsibilities for family members, which means they may struggle financially or with just time to deal with other matters.

Financial hardship: Almost half of adults do not have enough savings to cover an unexpected bill of £300. Also, 1 in 2 adults in the UK with debt problems has mental health issues.

The Scale of Consumer Vulnerability in the UK

What to do

So, what should we do when we identify someone as vulnerable and what impact will this have on them being able to get a mortgage?

A useful tool to help follow the correct process is the TEXAS model.

TEXAS was originally developed following a study on mental health and debt collection, but it has become a tool that is used across the sectors to handle a wider range of vulnerable situations.

It helps ensure staff record:

• the most relevant information about characteristics of vulnerability,
• how these characteristics affect support needs, while
• helping to meet data protection requirements.

The steps of the model include:

• T Thanking the customer for their disclosure.
• E Explaining how their disclosed information will be used.
• X  Depending on the basis on which the data will be processed either: eXplicit consent is sought or cheXs (‘checks’) are made to ascertain if the customer objects to data processing.
• A ​Asking the customer questions to find out key information to understand the situation better.
• S Signpost to internal support, or to external services with specialised expertise (where this is appropriate).

So, how does this look in practice?

When you identify a client who is vulnerable, firstly, you thank them for letting you know, because it is never easy to discuss these types of things.

Then you explain to them that now they have explained what vulnerabilities they have, what you will do with that information, such as note it on their file, so they won’t have to explain to anyone else. This includes the lender so they can continue to provide appropriate support. Following Consumer Duty, more and more lenders are asking for us to let them know if a client is vulnerable as they want to ensure they treat the customer fairly and appropriately. It is important to let the client know that the lender will not exclude the customer from any services due to their vulnerability.

Now the customer is aware of how this information will be used, you seek their permission to use it in this way.

So long as the customer is happy for you to register them as vulnerable, you should ask what help they will need? For example, if English isn’t their first language, do they need you to speak to a family member or send further details in a letter so then can take more time to review it.

Lastly, in some cases, they may need help beyond what you can offer, and in these situations the client should consider speaking to an expert. There are many free support charities or advice lines who can help with many situations, or they could discuss their issues with their doctor who can provide appropriate medical advice.

Just because someone is classed as vulnerable, does not mean they should be excluded from your services.

Being vulnerable doesn’t mean they should not get a mortgage, being vulnerable just means your client may need additional time or support from you to help them.

If you would like any further information on vulnerable customers, you can also read Connect’s Vulnerable Customers Policy HERE

Should you have any questions on this, please do not hesitate to contact myself or the compliance team.

Regards

Alan Baldwin

Director of Compliance

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

In our 2023 Summer Newsletter, we wrote an article called Use it or lose it. In this, we covered the FCA and Network rules that are required to maintain your permissions.

To maintain your Regulated permissions, each adviser must complete a minimum level of business.

Regulated activity covers the following:

• Regulated Home Finance, e.g. Residential Mortgages, Equity Release, Family BTL
• Consumer But to let, e.g. Accidental landlords
• Consumer Credit, e.g. Commercial loans to individuals
• Protection, e.g. Life, Critical illness & Income protection.
• General Insurance, e.g. Buildings and Contents insurance

In order to demonstrate competence, you must have completed a minimum amount of business within any of the above business types, which all count towards your regulated activity.

Connect’s policy is that each adviser must complete a minimum of two applications and one completion in any six-month period, this will then demonstrate competence and compliance with the FCA and Network rules.

What happens if you haven’t completed the minimum amount of business?

If, at six months, you are below the minimum business levels, you will be invited to re-attend training. Attendance at this training is mandatory to maintain your regulated permissions.

Failure to attend the training will result in the removal of that permission, meaning you cannot submit any regulated business until you have attended training and successfully completed an observation.

In situations where the training has been completed and there is still no business to warrant these permissions in the following six months, then the permission will be withdrawn.

Support!

To help our Network Members, our Relationship Managers will contact everyone who is affected by this to ensure they are aware and to offer any help the Network can support you with.

Should you have any questions on this, please do not hesitate to contact myself or your Relationship Manager.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

The risk from AI (Artificial Intelligence) fraud has significantly increased recently with the advances that have been made in AI technology.

AI is being used to help in financial services with many lenders now using AI to help speed up the underwriting process, but as well as the benefits, there are also risks.

What is AI Counterfeit?

AI counterfeit refers to the use of artificial intelligence technologies to create fake or forged items, documents, digital content, or representations that are intended to deceive.

This practice leverages the advanced capabilities of AI to replicate, imitate, or generate items that are indistinguishable from the original or genuine articles. The concept of AI counterfeit encompasses several areas:

Deepfakes: Perhaps the most well-known form of AI counterfeiting, deepfakes involve using AI algorithms, especially deep learning, to create highly realistic and convincing fake videos and audio recordings. These deepfakes can mimic real people saying or doing things they never actually said or did.

Forgery of Documents: AI can be used to replicate or create counterfeit documents. With sophisticated analysis of style and technique, AI algorithms can generate forgeries that are challenging to distinguish from authentic items.

Digital Identity Theft and Fraud: AI can be used to mimic personal traits, such as handwriting, voice patterns, and facial characteristics, leading to identity theft and fraud in digital spaces.

Can you spot the real from the fake?

Below are two passports, can you spot which one is genuine?

In fact, both have been generated using AI.

Since Covid, businesses have implemented many non-face to face processes which are still in place today. Instead of customers showing you their documents which you can then make a copy of, they will instead send you scanned copies without you having to have met them in person.

So how can you verify they are genuine?

Check for inconsistencies: AI-generated documents may have inconsistencies in the layout, font, or alignment. Look for any irregularities in the text or images.

Inspect the photo quality: AI-generated photos might appear too perfect or lack natural variations seen in genuine ID photos. Look for signs of artificiality such as overly smooth skin, unrealistic lighting, or unnatural facial expressions.

Verify security features: Genuine passports and driving licenses often contain security features like holograms, watermarks, and special inks. Check for these features by tilting the document under light or examining it with a magnifying glass.

Examine the details: Look closely at the personal details such as the name, date of birth, and address. AI-generated documents may contain unrealistic or nonsensical information.

Compare with known samples: If possible, compare the document in question with genuine passports or driving licenses to identify any discrepancies in design or content.

Use technology: There are various online tools and software available that can help identify AI-generated images. You can use these tools to analyse the document for signs of artificial manipulation.

Seek professional assistance: If you have doubts about the authenticity of a document, seek assistance from experts such as law enforcement agencies or document verification services.

Some lenders will require you to have the documents verified by a professional such as the post office who provides this service, but just because the lender hasn’t asked for this, doesn’t mean you can’t ask for this yourself.

So, if you have any doubts, you can ask your customer for the original documents or for certified copies. No genuine customer will refuse to do this, when a customer does refuse to provide you with information, that is quite often a sign of fraud.

Where lenders are not asking for verified copies of documents, this may mean that they are verifying the customers’ ID electronically. This is a good way to help combat this type of fraud and why we use systems such as RedFlag which also verifies customers’ ID.

One last tip

If you are unsure if a document is genuine or not, ask Compliance. On many occasions we have had bank statements that looked like they may have been tampered with, which we reviewed ourselves and on cases where we were still unsure, asked the banks directly. They will then check the statements for us and let us know if anything has been amended.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Halifax announce 1% limit on broker fees

It has been nearly a year since the FCA launched Consumer Duty and whilst all lenders have looked closely at broker fees, they are now starting to put firm rules in place on what they deem acceptable.

Halifax has announced that from the 1^st of June 2024, they will no longer accept cases where the broker fee is above their limit.

This limit has been set at 1% or £1,500, whichever is higher.

As an example, for a loan of £100,000, there would be a maximum fee of £1,500, and for a loan of £200,000, a maximum fee of £2,000 would be in place.

Read the full article HERE.

Lenders Pulling Rates

Lenders have been pulling many of their rates again lately, so we just wanted to advise everyone of our rate pull process.

If you are a BLUE status adviser, you are still required to send your cases to Compliance before you submit your application, even if the rate is being pulled.

However, to avoid any client detriment, Compliance will only conduct a quick ‘sense check’ of the case.

This means that instead of a full case check, Compliance will review the case to ensure the Fact-Find has been completed and the Minimum standard documents are on the case. This will usually be done within an hour of you submitting the case and once done, we will advise you to submit the case. Following this, a full case check will be conducted.

To submit your case for file checking, please email Compliance@Connectmortgages.co.uk.

Why the Packaged Route?

Did you know your case is more likely to be accepted if you choose the packaged route?

Lender feedback has told us that 84% of cases packaged by us are accepted, however, this is reduced to 73% if it is submitted by the broker themselves.

This itself is a good reason to choose the packaged route, our Case Management Team have built a great relationship and understanding of our packaged lenders. Many years of dealing with these lenders have given the team the knowledge of what they will want to see on a case, meaning that there are less delays in the process and your case can complete quicker. The Case Management team will also take all the hassle away by dealing with any queries and provide you with regular updates on how the case is progressing. So, you just have to sit back and wait for your case to complete.

We also have direct access to these lenders during our regular BDM visits where the team will discuss ongoing cases and will resolve many issues there and then.

On top of all of this, you will also receive higher commission rates when you choose the packaged route.

We package for many lenders, some of them are:

• Precise
• Kent Reliance
• Interbay
• Fleet Mortgages
• Family Building Society
• Hampshire Trust Bank
• The Mortgage Lender
• Pepper Money
• Foundation Home Loans

For a full list of lenders we package for, please see the Commission table HERE

As always, if you would like any assistance, please contact the Compliance Team, who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

So, what do we mean by staged income, or even inflated income, and are these both types of fraud?

Staged income is the process of falsely presenting a job that doesn’t exist. This could be by creating fake payslips to make it look like someone has a job that doesn’t exist or amending bank statements to show money crediting an account that never did.

We also see companies that are complicit in this type of fraud by providing payslips for individuals that don’t actually work for them. This is common with family businesses.

These jobs will be recent and will usually have started between one to six months before they approach a broker. So, it is best practice to conduct additional due diligence on the following:

• Recent employment
• Second jobs
• Family businesses

So, how do we combat this?

There are many checks we can do to help identify staged income, such as:

• Ensure the fact-find has a full 12 months employment history.
• Ask for additional payslips and bank statements.
• Request HMRC Taxable income statement.
• Request employment contracts.

Other checks will include reviewing the location of the company and seeing if this makes sense for where your customer lives, to actually work there?

We have seen cases where people have a job, but it is 70 miles from where they live. This may make sense for someone on a high income as they will be more willing to travel for their job; however, this wouldn’t make sense for a shop worker on £25,000.

We have also seen cases where customers have two jobs. However, on closer inspection, it turned out they were both full-time and would require the customer to be in two places at the same time. Which isn’t possible.

Also, how do they get paid? Is this via a direct transfer into their bank account or do they get paid in cash? Most people are paid via transfers such as BACs payments or Faster payments, and in these situations regular cash payments will appear suspicious and should be investigated further.

But for certain jobs, such as shop owners or market traders, cash deposits into their bank accounts will make sense.

However, you can only know if the salary makes sense if you really know your customer.

Collecting documents and asking questions to fully verify the identity of your customers is called ‘Know Your Customer’ or KYC and is one of the best ways to reduce financial crime. For each case, you should be 100% comfortable that you know who your customer is and the information they have given you is correct.

So, what is inflated income?

Inflated income is where the employment is real, but the salary has been increased or ‘inflated’ to help obtain a mortgage that otherwise would not be affordable.

In these situations, all the documents will be genuine and will show the required income and will therefore look perfectly fine.

However, once the mortgage has completed, the salary will be reduced back to its original level. This is still fraud.

So how do we prevent this?

Whilst all of the documents we could request will show the required income, brokers can still conduct checks that will help reduce the potential of this type of fraud, this is where KYC or Know Your Customer is essential:

• Does their income level match that expected of that type of role or the size of the company?
• What is the turnover of the business? Could they sustain that level of salary?
• Is the income being spent each month or is it being left in the account?

Quite often with this type of fraud, the individual will have to pay back that money; therefore, it may remain untouched in their account. But think, how often do you see a salary go into a bank account and not get spent?

Lenders conduct further reviews after cases are completed, and if they see evidence that the salary was not genuine and has been reduced to a lower amount, they will flag this as a risk case against the broker and we have seen many examples of this.

As always, if you would like assistance or a second opinion on a case you are unsure of, please contact the Compliance team who will be happy to help.

Regards

Alan Baldwin

Director of Compliance

Ror any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

We appreciate, as an adviser, you are aware that an essential part of your ongoing requirements for your annual fit and proper test, is to remain on track with completing your annual CPD.

As we reach the end of Q1, we’ve started to review individual YTD CPD totals.  This is to check your status to ensure you are on track to avoid panic at the end of the year to catch up.

As a reminder, as of the end of Q1:

• If you have regulated mortgage permissions you should be on 375 Mortgage CPD points.
• If you hold only unregulated permissions, 150 CPD points.
• For insurance you should be on 225 CPD points.

Make su​re you​ record everything!

We are aware that often you will have attended meetings, etc and not recorded it.  So as a reminder, this can all be recorded on the LMS system HERE with just a simple press of a few buttons and uploading some notes.

If you need additional CPD content, we are constantly adding new material to LMS and very soon will be adding courses worth 16 hours of Insurance CPD which will cover the annual requirement!

Lender Digital Learning

For Mortgage CPD, log in to LMS and filter your courses to “Lender Digital learning”​ as below:

You will see CPD dashboards for the following Lenders & Insurance providers:

• Paragon Bank
• Accord/YBS
• LV – GI
• Source Insurance
• Livemore
• Virgin Money
• OSB Group (Precise & Kent)
• The Mortgage Lender (TML)
• Foundation HL
• Paymentshield
• Hodge
• Aldermore

More to go live soon ….

Additional External Sources

In addition to this, other external sources of CPD include:

• For insurance CPD – Protection Guru – https://protectionguru.co.uk/
• For Mortgage CPD – Financial reporter – https://www.financialreporter.co.uk/academy

Both of these sites have a huge amount of informative CPD articles that can be added using the process provided.

And finally, should you think you are struggling to find suitable material to complete your CPD, please contact the member support team at memberseupport@connectmortgages.co.uk who will be able to advise and direct you to the sources and material available.

Member Support Team:  membersupport@connectmortgages.co.uk​

Compliance Team:  compliance@connectmortgages.co.uk

Do you have a Protection conversation with every customer?

Since we started using Elevation for customer feedback, we have been given a lot more information and insight into the customer journey.

Some of the key highlights on the Elevate reports are the questions around protection.

This has highlighted a number of clients that would have appreciated a protection conversation but didn’t receive one.

Following Consumer Duty, we enhanced our process on protection and introduced the mandatory requirement to complete the Insurance Your Needs tab on OMS. So long as this is completed as part of the fact-finding process, every customer will have a protection conversation.

But why is this important?

Should someone stop receiving a salary, even for a short period of time, they can quickly go into arrears with their mortgage lender and typically, lenders will start repossession proceedings after just three months of not receiving payments.

This is why protection is so important, but a conversation must take place for a policy to be sold.

Simply asking a customer about their savings and how long they could maintain their commitments should they lose their job is a great start to the conversation.

Whilst we have the questions on the Insurance Your Needs tab, this isn’t a script, and each adviser will have their approach to determining the need for protection.

Other questions to consider are:

• If they died, would their partner be able to maintain the mortgage repayments or would they like the mortgage to be repaid in full?
• How long will their employer provide full sick pay if they are unable to work?
• If they were to be put on statutory sick pay, would they be able to maintain their commitments including their mortgage?

These are all questions your customers may not have considered but should form part of your fact-finding process. The answers given will then determine if there is a need for protection.

For further information, we have a Protection Process guide in the Operations Manual.

This will help you with the protection process questions; however, if you have further questions, you can always speak to anyone in the Compliance team, who will be happy to help.

Observations

One of the changes we are making to assist advisers is introducing protection role plays.

This will either be as a stand-alone role play or included with the existing mortgage observations.

These role plays will then give us the ability to provide coaching and support that will, in turn, help you with having these conversations with your customers.

Training

Please remember that we run Protection training courses on a monthly basis that are free to attend for any existing adviser. So, if you feel you would benefit from re-attending this, please do not hesitate to contact the Member Support team.

Kind regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

The Case Management team helps hundreds of cases progress, and they know all the tricks that can help your case complete quickly and with fewer declines.

So, what are these tips?

How to avoid delays

The biggest cause of delays that we see is OMS not being completed in full. This causes the team to contact brokers and ask for this information as it is required before the DIPS & Applications can be submitted. Information such as:

• Solicitors’ details
• Valuation/ Access Details
• Original Purchase Price and Date of Purchase
• Incomplete or missing client Identification, such as passport numbers

All fields in OMS are essential and mandatory; any missing sections have the potential to delay a case. So, if you want to avoid delays, spending a few extra minutes completing OMS will help your case greatly and get it to complete that little bit quicker.

We also see a lot of cases being delayed due to the adviser not having set up the required agency with that lender. When this happens, this can delay a case up to a week as it can take lenders this long to register the broker on their systems.

Therefore, when you are sourcing a product, ensure that you have agency, not just with the lender of choice, but the next two or three in the list as you may have to change the lender during the process.

How to avoid cases getting declined

The biggest cause of cases being declined that we see is the client not meeting the lender’s criteria, and these are things that can easily be checked before selecting that lender.

Credit Issues: lenders all have different appetites for credit, and this is always available on the lender’s website. So, ensure you review the client’s credit file for missed payments and make sure the lender accepts that level of defaults before you submit the DIP; never assume this will be checked during the DIP process.

Property Types: again, each lender has a different appetite for property construction. All lenders will be happy with standard brick construction, but what about other construction or build types such as:

• Timber frame
• Steel frame
• Poured concrete
• Flat roof
• Flats over five floors high
• Flats over shops

If you see something that is a little different from the normal, ensure you review the lenders’ criteria or if in doubt, speak to their BDM. For a little more information on the types of properties that lenders may not like, please click on this LINK.

With Mortgage Fraud a constant threat, we wanted to share some of the trends our Compliance team has seen recently.

Employment Fraud

A common type of employment fraud we have seen in the industry is inflated salaries whilst working for a family business, this is something that lenders look very closely at. This is due to the fact that income amounts can easily be inflated.

And what happens to these inflated incomes once the mortgage completes? As expected, this quickly reduces.

So, what can you do to combat this type of fraud?

KYC – Know Your Customer

KYC is the best way to help combat this type of fraud. KYC is the process of understanding the background of your client and their financial circumstances. Just doing some simple checks can help identify if what they have told you is genuine or not.

Conducting a Companies House searches will help you identify if the client has any connections with the company that they work for. Using this site, you can review all the people involved in the business and if their surnames match, then it is possible that the client is connected to the owners in some way. Also, using Companies House, you can review their financial accounts and review their turnover and size off the company. This is a good way to check if what the client has told you about their employer matches the truth.

Ensure you have collected at least 12 months’ employment history. In many cases of employment fraud, the client will only have been in their new job for a few months. Therefore, find out what they did before their new job or new role. Find out information such as:

• Has their income only recently increased?
• Are they being paid in line with the role and the size or turnover of the company?
• What is the distance between the job and where they live?
• Is their new job in line with what they were doing before?
• Are they connected to the owners in any way?

In each instance, you should ask yourself, does this make sense? Do I need anything further to support this case? If you are in any doubt, you can speak to Compliance before you submit, and they will be happy to help.

Unexplained Lender Declines

Sometimes, you may have completed all your checks, and you see no issues, but the lender still declines the case. When this is due to criteria, they will tell you just that, but sometimes they will decline without further information. This is usually a sign that they are aware of something that you aren’t. This can be intelligence from systems or other lenders that we do not have access to. But when a lender does decline your case, don’t just resubmit with another lender without doing additional due diligence.

Lenders have greater communication with each other than ever before and will tell each other about cases they decline due to fraudulent reasons. This means if you try and resubmit your case with another lender, it is likely to get declined again and your name could then get connected to the client in relation to the lenders concerns.

So, what can you do to combat this? Firstly, you should be asking your client during the fact-finding process if they have tried with any other brokers or had any applications declined? If the answer is yes, then you need to find out as much information about their previous cases as possible. If the declines are not property or criteria related, then they may need to find out what information is being held about them.

If a fraud flag is registered with a lender, it is likely to be held on one of the main fraud databases such as National Hunters, National SIRA or CIFAS. If your client wants to see what information lenders may hold on them, they can apply using the following links:

• https://nhunter.co.uk/
• https://www.cifas.org.uk/
• https://www.synectics-solutions.com/what-we-do/national-sira

If the flag is registered in error, then the client can contact them to try and remove it. Then once you are happy that all extra due diligence has been completed, you can resubmit the case.

If you have a case and you have any questions, or are unsure of what checks you should be doing, as always you can contact the Compliance team who will be happy to help you.

Regards

Alan Baldwin

Director Of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Nothing makes Compliance happier than telling someone that they have passed their file check. However, this isn’t always the case, but there are things advisers can do before they submit their case for checking that will significantly increase the chances of getting GREEN.

Some of the most common reasons that prevented cases from being graded green in 2023 were:

Proof if ID: Did you know an unsigned passport is invalid? and therefore not able to be used as Proof of Identification? This is a fairly new requirement on passports, so may not be something everyone knows. Further information on this can be found here LINK.

Bank Statements: You should be able to evidence the last three months’ worth of salary credits in the bank statements you obtain from the client. If only two appear due to the dates of the statements, then you need to request an additional one to ensure yourself and Compliance can compare the three salary credits to the payslips. Further information of the minimum documents that are required on cases can be found in the Operations Manual HERE.

Amended Documents: What checks can you as an adviser do to help identify potential fraud? Have you reviewed the opening and closing balance on the bank statements? We saw several cases in 2023 where these did not match, and this is an obvious sign that something in the statement has been amended. Fuzzy logo? Another clear sign that something is off with a bank statement is that the bank’s logo appears to be blurry. Ensure you are reviewing any document you receive from a client and if anything doesn’t seem right, call the Compliance team who will be happy to review for you.

Another great way to keep ahead of fraud trends is to attend one of the many lender webinars. HSBC runs monthly webinars that every Connect Network member must attend to maintain their agency with them. Not only are these mandatory, but they are also helpful in providing great information that will help you identify possible fraud.

If it isn’t written down, it didn’t happen: Your case should tell the story of your interaction with the client. There have been many occasions where we will query or request something and it turned out that it already happened, but it just wasn’t noted on the case. If you have done extra work to verify a client’s employment, remember to upload the document or note it on the file. This causes many cases to get declined by lenders and some of these would have been accepted if the story was told.

Protection Conversation:  Whilst having a protection conversation has always been part of the sales process, Consumer Duty has put even more emphasis on this requirement. It is now mandatory that every regulated case has the Insurance Your Needs section completed in full. This also needs to be completed if you aren’t doing the advice yourself and are instead referring the lead to Stonebridge.

Following the implementation of the Vouchedfor client feedback process, we have been able to get a far greater insight into potential customer detriment, and we have seen that we have many clients who would have liked to have a protection conversation but didn’t. This is why it is so important to cover off the Insurance Your Needs tab during the fact-finding process, as this will identify clients who would like to discuss protection further.

Lastly, the best thing you can do to ensure you have covered everything you should have, is by completing the File Check tab on OMS, if you have covered off every area on this tab, you are far more likely to receive a Green file check, first time.

Regards

Alan Baldwin

Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

As part of our ongoing commitment to regulatory compliance, we would like to bring your attention to the upcoming Annual Financial Data Request mandated by the Financial Conduct Authority (FCA). For those who have been affiliated with Connect for over a year, you may recall receiving a similar form last year.

The FCA requires the submission of this information on an annual basis, and it is now time to initiate the process once again. This data request will be directed to the controller of each firm, who is expected to complete it on behalf of the entire organisation.

This data request involves updating your principal firm (Connect) of all the following:

1) Total Regulated Revenue (outside of Connect)

This is all revenue generated from regulated activity, such as:

• Regulated mortgages
• Personal Protection and GI
• Equity Release
• Commercial mortgages to individuals
• Consumer BTL
• Regulated second charges & Bridge loans

2)  Revenue generated from Financial Non-regulated activities (outside of Connect)

Any activity of a financial nature that does not involve the person carrying on regulated activity.  This would include, but not limited to, revenue from activities such as:

• investment services
• insurance
• pensions
• banking
• lending (including consumer credit, mortgages, factoring, financing of commercial transactions)
• financial leasing
• money transmission
• payments
• guarantees and commitments
• foreign exchange
• the issuance of securities and other service of a corporate finance nature
• custodial, depositary and trust services
• financial information and data services

3) Revenue Generated from Non-Financial Non-Regulated activities (i.e. all other business)

This includes, but is not limited to, revenue generated from running any of the following activities, this does not include referral fees received:

• Running an Estate Agency Business
• Property Sales
• Solicitors
• Accountancy

For each category, a comprehensive explanation of the type of business and corresponding revenue is required.

When do you need to complete this?

We will shortly be sending this form out via email to each controller to complete and return.

This information must be returned to Connect within two weeks of receiving the request, which will be issued shortly, so you may want to start preparing the information.

If you have any questions in relation to this, please contact me directly.

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries regarding this email, please contact Member Support Team

Email : membersupport@connectmortgages.co.uk

The next batch of emails will shortly be going to your completed mortgage customers from Elevation. As a reminder, these emails will be as if you had sent them, but will be sent automatically for you from the Elevation system.

You should by now have received your login details directly from Elevation, and you will receive an email whenever a customer completes feedback so you can review it.

Reminder, Consumer Duty Requirements

As a reminder, Consumer Duty requirements mean all Networks need to ensure they are able to measure that the advisers they supervise are meeting the new requirements of the Duty. As previously communicated, Consumer Duty means we need to provide actual evidence that shows we are putting customers at the heart of the business. Many advisers do have review facilities such as Trust Pilot or Google reviews. However, the FCA has indicated that a good review does not in itself satisfy their requirements in evidencing that good consumer outcomes have been delivered.

Why Elevation?

Some networks have chosen to telephone customers and ask questions to obtain this evidence. We have chosen Elevation as we believe it is also a great tool for our members. Elevation by VouchedFor is different from a normal review service in that it asks a range of questions to fully understand the customer’s experience. The information from this gives both the network and the adviser the ability to understand the journey from the client’s perspective, as well as evidence the good outcomes or learn where improvements can be made.The insights the adviser gains can increase conversions, business levels, and personal recommendations.

Launch Webinars

In September, we invited all members to attend one of 2 webinars with the Elevation team so that advisers would understand what was happening and why. If you did not manage to attend the webinar, you can view a recording of it here:

Feedback Request Email

The feedback request email sent to your customer by the Elevation system is addressed from you because your customer knows you. This means a higher response rate. To maximise the benefits, it’s a good idea to let your customer know that they will receive it. We are currently scheduling requests for completed mortgages, but in due course, we will schedule requests at earlier stages in the process. This is incredibly powerful, as it will provide you with insights on why some customers do not proceed with an application.

All advisers have access to a free account with Elevation to see their feedback. There is also an option to have a personal VouchedFor profile to display the customer rating part of the Elevation feedback at a discount to the normal price. This is similar to services like Trust Pilot and Google Reviews but can also help you with lead generation through their free ‘find an adviser‘ service.

If you would like any further information, please reach out to the Member Support Team in the first instance.

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries regarding this email, please contact Member Support Team

Email : membersupport@connectmortgages.co.uk

Some of you have mentioned you have noticed the feedback request emails that are now being sent to your customers on your behalf by the Elevate system from VouchedFor. You should have received your login details directly from Elevate, and you will receive an email whenever a customer completes feedback so you can review it.

Reminder, Consumer Duty Requirements

As a reminder, Consumer Duty requirements mean all Networks need to ensure they are able to measure that the advisers they supervise are meeting the new requirements of the Duty. As previously communicated, Consumer Duty means we need to provide actual evidence that shows we are putting customers at the heart of the business. Many advisers do have review facilities such as Trust Pilot or Google reviews. However, the FCA has indicated that a good review does not in itself satisfy their requirements in evidencing that good consumer outcomes have been delivered.

Why Elevate?

Some Networks have chosen to telephone customers and ask questions to obtain this evidence. We have chosen Elevate as we believe it is also a great tool for our members. Elevate, from VouchedFor, is different from a normal review service, in that it asks a range of questions to fully understand the customer’s experience. The information from this gives both the Network and the adviser the ability to understand the journey from the client’s perspective and evidence the good outcomes or learn where improvements can be made. The insights the adviser gains can increase conversions, business levels and personal recommendations.

Launch Webinars

In September, we invited all members to attend one of 2 webinars with the Elevate team so that advisers would understand what was happening and why. If you did not manage to attend the webinar, you can view a recording of this here: https://connectifa.box.com/s/5s5exnyuozuna56g9lfh710i6vwkivsc

Feedback Request Email

The feedback request email sent to your customer by the Elevate system is addressed from you because your customer knows you. This means a higher response rate. To maximise the benefits it’s a good idea to let your customer know that they will receive it. We are currently scheduling requests for completed mortgages, but in due course, we will schedule requests at earlier stages in the process. This is incredibly powerful as it will provide you with insights on why some customers do not proceed with an application.

All advisers have access to a free account with Elevate to see their feedback. There is also an option to have a personal VouchedFor profile to display the customer rating part of the Elevate feedback at a discount to the normal price. This is similar to services like Trust Pilot and Google Reviews but can also help you with lead generation through their free ‘find an adviser’ service.

If you would like any further information, please reach out to the Member Support Team in the first instance.

Kind Regards

Alan Baldwin
Director of Compliance

You may have heard a lot about lender and provider fair value statements, some lenders may also have sent those to you, and you are wondering what you need to do with them.

You will be pleased to hear that it is the responsibility of the Network to review these for the lenders we have on our panel.

As part of Consumer Duty, we have collated the Fair Value Statements and completed an assessment to check that the product appears fair and that the target market for the product is consistent with the customers our advisers are recommending the product to. We have also looked to consider if there are any characteristics of the product that make the product suitable or unsuitable for vulnerable customers.

This is an ongoing piece of work, as lenders launch new offerings. We will be conducting lender reviews on a minimum of a yearly basis, and in some cases as frequently as quarterly for some of our most used lenders.

The purpose of these fair value statements is for them to be reviewed at the Network level and not at the individual customer level.

So while copies of these will be available from the lenders, their websites, BOX and the sourcing systems, you are not required to add these to the customer file on OMS and you must not give them to customers.

Therefore, there are no changes at this time to your current research process, meaning the selection of mortgage lenders should still follow the ‘Cheapest Rule’ requirements.

For protection, Connect belong to the Genus Protection Club, which offers a ‘loaded panel’. This means that the customer is charged a higher premium than may be available by the customer directly so that the commission for the adviser can be higher to reflect the work involved.

We have completed a re-assessment of this panel offering as part of Consumer Duty. At this moment in time, we are satisfied that the additional advice and services the customer benefits from when using an adviser still represent fair value under the Genus panel. However, for any adviser still operating under the old ‘non-advised’ model, we will have already been in contact to help you to switch to the fully advised model.

Fees Policy

Following the previous communication about fees, there have been a couple of questions, so I will just touch on those themes.

Some of you are concerned about the cap that will be applied to the fees you can charge. It is important to note that the fair value of broker fees is being driven by the FCA rather than Connect.

The feedback we have received is that the caps being applied by the larger Networks are considerably lower than the Connect offering, and in many cases, the Networks are not allowing percentage fees.

We have also adopted a tiered approach which means a higher cap for the more complex products, and for the majority of the unregulated mortgage products, there is no cap.

As part of Consumer Duty, this is being monitored by lenders. For example, lenders like Coventry send us regular reports detailing specific cases where the fee is more than 1% of the mortgage, regardless of whether it is Residential or Buy-to-Let.

To support all advisers, while we have issued this guidance, we are of course happy to consider individual requests either on a case-by-case basis or where the Network Member can provide their own acceptable fair value assessment of a different fee and service model.

You can view the guidance again in more detail in BOX

NETWORK FEE GUIDANCE:   View Here

SETTING YOUR OWN POLICY:  View Here

If you need any further assistance, please do not hesitate to contact the Compliance team: compliance@connectmortgages.co.uk

Kind Regards

Alan Baldwin
Director of Compliance

Call :  01708 676110

Email : compliance@connectmortgages.co.uk

We are just a few weeks from the final implementation date for Consumer Duty.

Over the next few weeks, I will be sending you regular Consumer Duty emails, like this one, covering some of the updates the Network has made in readiness for meeting the Consumer Duty.

The Duty introduces new rules and guidance to ensure that:

• Products and services: are designed to meet the needs, characteristics and objectives of a specified target market
• Price and value: Products and services provide fair value with a reasonable relationship between the price consumers pay and the benefit they receive
• Consumer understanding: Firms communicate in a way that supports consumer understanding and equips consumers to make effective, timely and properly informed decisions
• Consumer support: Firms provide support that meets consumers’ needs throughout the life of the product or service

In this email, I will cover fees that you charge and how that impacts the Consumer Duty Price and Value requirement.  

Fees And Fair Value

It is important to note The Duty applies to regulated mortgages. This includes regulated Buy to Let, such as Consumer and Family Buy to Let. However, as a regulated firm, we have also considered The Duty when creating our approach to the non-regulated products we offer consumers.

The Duty does not have a retrospective effect and does not apply to past actions by firms. However, the Duty applies, on a forward-looking basis, to firms’ ongoing work for existing customers.

The FCA confirms:

A mortgage intermediary must ensure that its own fees and charges offer fair value and that payment of these does not result in the product or service ceasing to be fair value overall. Firms should not exploit customers by, for example, charging unjustifiably or unreasonably high fees or charges to more vulnerable groups of customers such as those with a poor credit history or older customers.

Firms need to ensure they are providing consumers with the information they need to make informed choices and understand the costs involved. Firms should consider their fees and charges in the context of the Duty and consider what steps they may need to take. In particular, firms should review their services and pricing to satisfy themselves that they are offering their customers fair value.

The Connect Network Fee Policy

The work required under fair value sits with the Network creating a fair value framework, ensuring the services it provides and the products it distributes are fair value and that its distribution arrangements do not affect the overall fair value (for example, as a result of a broker fee).

We have collated and reviewed the fair value statements for the lenders and providers on the Network panel. We will be monitoring the lenders and providers on our panel to ensure that they meet the standards we expect to deliver good outcomes for our customers. We have also reviewed some of the fees that our Member Firms charge in light of the new rules and completed our own assessment of the fair value of fees using services typically offered by our Network Members.

Many of you offer complex and specialist advice and hold a level of lender and criteria knowledge that is higher than a typical mainstream-only mortgage adviser, which we wanted to consider when setting the Network fee policy. We are mindful of the FCA statement that firms should not exploit customers in more vulnerable groups, such as those with a poor credit history. However, we do feel that a higher level of expertise and a more detailed research and application process for complex cases does need to be recognised. (We will be communicating in due course additional work we are doing to identify and support vulnerable customers.)

The Network has adopted a tiered approach in relation to fees. This policy specifies the Network’s maximum fee tolerances for different product types as per the table below:

We do not expect all advisers to charge the maximum, these are just the maximums allowed without the need for the Network Member to refer to compliance for pre-approval.

More details and a fuller explanation can be found in the full document in BOX here:

When we complete our Annual Fit and Proper assessment with each firm, moving forward, we will be asking you to outline your firm’s own fee-charging policy and how you believe your fees and services offer fair value to your customers.

To assist you in thinking about this, we have created some guidance and tools, which can also be found in BOX here:

If you need any further assistance, please do not hesitate to contact the Compliance team.

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

To improve our compliance process and to allow cases to progress quicker, we have decided that for advisers working towards CAS status, we no longer require cases to be submitted to Compliance for Pre-DIP checks.

Compliance will instead check cases at the pre-application stage for those who have not yet received Competent Adviser Status (CAS). After achieving CAS, the team will continue to complete quarterly case checks for all advisers on mortgages that have been completed.

This,however, does not change our Network requirement to have cases correctly packaged before you submit a Decision in Principle (DIP). Compliance will conduct spot checks on cases at the DIP stage to ensure minimum document requirements are still being adhered to. This is important to ensure that your DIP to APP success ratio is within expected lender standards.

How will the process work?

To ensure we are still maintaining an appropriate level of control, there will still be a requirement for some advisers to have DIPs processed by the Case Management Department as below:

• ACADEMY For Academy advisers, all cases must be submitted to the case management team for processing until CAS status has been achieved. A minimum of 6 months and a minimum number of cases apply before Academy advisers can complete DYA training to submit their own cases.
• EXPERIENCED For experienced advisers (those with 12 months or more industry experience and previous CAS status), the adviser must submit their first case to Case Management to process. To be able to submit your own DIPs going forward, thiscase must pass the Case Management case review, and the adviser must completethe DYA training. The team will then confirm that you can submit your own DIPs.

You can notify compliance to complete the pre-application review at any time after the DIP is completed.

If there are any DIPs currently waiting for a Compliance review, we will contact all advisers to confirm that the case can be submitted to the lender. These cases must, however, still be sent to compliance for a pre-application check before the full application is submitted to the lender.

Timescales

These changes will take place with immediate effect. If you have pipeline cases, you will receive a confirmation email from Compliance.

We are listening

We are also introducing an updated grading system, which will mean some cases we currently class as Amber may still be able to achieve a green pass, with minor errors. There will be 6 levels of grading as follows:

6-Green  Advice is suitable, and the file is complete with no missing documents or information.

5-Green Advice is suitable, but there are minor fact-find omissions or document omissions (not minimum standard documents) but the omissions are not affecting the advice.

4-Green / Amber  Advice is suitable, but some documents evidencing advice are missing, or the suitability letter is presented with minor omissions. Rated as amber-4, but upgraded to green-5 if corrected within 48 hours.

3-Amber  Advice is suitable, but minimum one or more company standard minimum documents are missing, or the suitability letter is presented to the customer with material omissions on the recommendation, requiring re-issue.

2-Red Unsuitable advice, eg. mortgage unaffordable, product does not suit customer needs, justification for the advice not clear. (If acceptable justification and correction are provided within 48 hours, upgraded to Amber-3)

1-Red  Suspected fraudulent case, e.g.Back door residential, staged income, fraudulent documentation etc.

Your total points over a quarter will be averaged and used to identify overall training and support needs.

I hope these initiatives show that we are listening to feedback to help all our members to get compliance right for the customer without unnecessary burden.

If you have any questions about this new process, please contact me or the Compliance team directly: compliance@connectmortgages.co.uk

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries, contact the Compliance Team

Call :  01708 676110

Email : compliance@connectmortgages.co.uk

Unfortunately, we have seen an alarming increase in mortgage fraud recently, particularly relating to income fraud.

A number of cases have been presented that advisers may have prevented with better due diligence.

Staged income is one area we have seen an increase. For example, a customer has got a recent wage rise which is quite a big jump in income and happens to be the amount they need for the affordability to work. Often there is a family connection, e.g., they work for a family business, making it ‘easy’ for applicants to receive a temporary wage increase which is not real.

Another area is around second jobs, e.g. a recent second job has been taken, with the income needed for affordability. Often the amount of working hours in total is not plausible, and/or they have been employed by a family member.

Lenders are sharing more and more risk data and also looking at applications post-completion. They will check, for example, with the client’s bank if the income has been and continues to be received at the level declared on the application.

Application flags

When there are any flags on an application, e.g. 2^nd job, the employer is far away from the applicant’s home, a big pay rise, employed by the family, the applicant appears to earn more than the employer, then the lender will increase the questions and documentation requests. This can indicate there is a concern. Of course, just because there is a flag, does not mean this is not a genuine application. You can avoid any misunderstanding by making sure when the application is submitted that more detail explaining the applicant’s circumstances that may mitigate the risk, is provided upfront.

It’s incredibly important to respond to any requests from the lender for documents, even if the case is not proceeding. Make sure you tell the lender exactly the reason why the case is not proceeding. Failure to do this can mean the lender attaches a suspicion against the case and the adviser, where there is not one.

Sending a client’s application to multiple lenders to see what ‘sticks’ will also earn you a red flag from a lender, which is why this is not tolerated by the Network. As will continuously misunderstanding the lender’s criteria and submitting cases outside of their policy.

Lender Expectations and Panel Removals

The lender expects an adviser to know their customer and complete detailed due diligence on all information and documentation with due care and knowledge. Fraudsters can be quite sophisticated, which is why we created the ‘risk checks’ on OMS to help guide you on what to look out for. Every time a lender blocks a potentially fraudulent application that you have not spotted, this increases the lender’s risk. If this continues, or if post-completion fraudulent cases are uncovered, the broker will be removed from the lender’s panel.

If you are removed from one lender’s panel, this information is shared with the FCA and other lenders, and you may be subject to further panel removals from other lenders simply because of the first lender removal.

This means the Network would have no alternative but to terminate your contract, and you will no longer be able to submit any mortgage business.

Further information and training

Liz recently wrote a blog which can be seen here

More information and training can be found in LMS, and both the compliance and member support teams can assist with individual case queries.

HSBC are also running a virtual fraud training session on Wednesday 31^st May at 9.30am, you can register here

Kind Regards

Alan Baldwin
Director of Compliance

In order to help combat financial crime and to reduce the number of fraudulent applications HSBC has seen in the industry lately, we have agreed with them to make their fraud training webinars, which are being hosted just for Connect IFA advisers, mandatory for all staff with agencies with HSBC.

Whilst being mandatory for advisers, this is also open to any staff who would like to attend because they expect to request a HSBC agency soon or they are keen to understand more about fraud to protect their business.

You can register below for webinar being hosted 31st May, by following the appropriate link below.

If you have an HSBC agency and wish to continue to use it, you must attend.

If the date is a problem, please advise and we will arrange an alternative for you to attend.

Please note these events will be accessed via Zoom.

• Wednesday 31st May- 9:30an  –  Zoom Link

If you have any questions, please contact Compliance.

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries, contact the Compliance Team

Call :  01708 676110

Email : compliance@connectmortgages.co.uk

Since joining Connect, I have been thinking about how we can improve on what we do currently within the Compliance department to further support our Network of AR’s.

I have been looking at the Broker journey from training to achieving Competent Adviser Status (CAS) and have decided that we can do things a little differently and achieve better results.

We have created a new role within the department, a T&C Supervisor, who will be responsible for managing the Broker journey and providing support and coaching for advisers who have not yet achieved CAS status.

Part of this new role, will be to have regular 1-1s with non-CAS advisers where we will review the following areas:

• File Checks
• Complaints
• Annual Observations
• Business MI
• Compliance Policies
• Dipping into cases and reviewing case quality

This role is also being created to provide a point of contact for queries, for example,

• If you would like to discuss your remedial action from a recent file review.
• Discuss any challenging cases you would like support on
• Confirm any of Connect’s Compliance policies to ensure you are packaging a case correctly

The goal of this new role is to increase the number of CAS advisers within the Network and to improve the case quality which will therefore, increase the amount of cases that Pass first time.

This role will commence from the 1st of March, with Ashiq Khan taking the role of the T&C Supervisor. 1-1’s will begin to be booked in the coming days.

If you have any questions about this new role, please don’t hesitate to let me know.

Kind Regards

Alan Baldwin
Director of Compliance

For any questions or queries, contact the Compliance Team

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

I am pleased to introduce everyone to Alan Baldwin, who has joined Connect as our new Director of Compliance. Alan has many years of experience in compliance, holding senior positions at both lenders and brokerages and is an excellent addition to the Connect leadership team at a time when compliance matters have never been higher on the agenda.

As alluded to in my previous emails, the FCA has now issued the Section 165 notice to all Networks requesting the AR financial data and in turn, more information will be shared shortly in relation to the additional data we will require from all our AR firms to meet the FCA requirements.

In the meantime, Alan would like to share the following update with you:

Regards

Liz Syms, CEO

____________________

We have recently seen a trend from lenders to enhance and increase their audit requirements. You may have already noticed an increase in requests from lenders for you to send them client files, this will be, in part, due to the FCA’s recent enhancement on the Appointed Representative (AR) requirements for firms. Meaning, they are now required, as we are, to enhance the oversight and controls when it comes to ARs. If anyone would like to read the updated requirements, you can here: https://www.fca.org.uk/firms/appointed-representatives-principals, alternatively please feel free to contact Liz, Kevin or me if you would like to have a conversation on this matter and what changes are likely to take place.

To ensure we provide as much support as possible if you receive a request from a lender for a copy of your client file, post-completion, please ask the Compliance team to review the case before you submit the data. We will then review the case and ensure everything is in place before the file is sent to the lender.

This goes towards our objective of trying to increase the use of our Compliance team as a support function for all of our advisers. Therefore, I would like to remind everyone that if you have any questions on cases or anything at all, please call the Compliance team, who will be happy to help.

Another trend we have seen in the market since the release of the updated AR requirements is that lenders appear to be taking a zero-tolerance approach to anything that doesn’t look right. This has resulted in an increase of ARs being removed from their panel, with little or no warning.

Previously lenders would have called the firm to discuss the case and give them a chance to explain, However, this no longer appears to be the case. A panel removal can be devastating to your business, so again, I would like to offer Compliance as support should you have any queries.

As panel removals are often off the back of issues identified with submitted applications, these are a few things you can do to protect yourself from potential lender panel removal:

• Ensure the case is fully packaged (as is all the correct documentation) before you submit the application.
• Use the file check tab on OMS to verify and check the documentation for accuracy or issues.
• Leave notes to explain anything that the lender may query, and add these notes to the application when it is submitted (Or provide them to the Connect case manager to add for you).
• Speak to BDMs or underwriters before you submit applications to explain unusual cases, and add notes to the application confirming the conversation and the date and name of the person you spoke to.
• Flag anything you are uncertain about to the Compliance team who will help you to evaluate.

For further queries, please contact myself or the compliance team.

Regards

Alan Baldwin

As the main controller of the Appointed Representative firm with Connect IFA Ltd, I am writing to let you know we now need you to complete the below form to provide us with the additional data we require for the FCA Section 165 data request.

This information is needed no later than the 31st of January 2023

You may recall my previous emails advising you that the FCA would be sending this data request to all networks, asking for information about all our Appointed Representatives. The data relates to each firm, not individual adviser, which is why we have sent the form to you to complete on behalf of the company.

We already hold some of the information they are asking for, such as your complaints data and the advice permissions you have with us. However, they are also requesting other information that we have not routinely collected in the past. Please note going forward that this will be an annual request at the same time each year, and completion of this data is a compulsory FCA requirement to maintain your appointed representative status.

Complete the form here:
VIEW FORM ONLINE

Briefing session held on the 3rd of January 

Thank you to everyone who joined the briefing session.

The recording is now available in BOX and can be found here, along with a summary of the Q&A.

Please remember this request only needs to be completed once by the firm’s controller on behalf of the whole firm. Individual advisers belonging to the firm do not need to complete the form. Also, it only applies to firms that were live on the FCA register as at the 8th of December 2022.

If you have any individual questions, please do not hesitate to contact the compliance team.

Call : 01708 676110

Email : compliance@connectmortgages.co.uk

Kind regards

Liz Syms, CEO

As the new year begins, this email is to inform you of some changes being made to the CPD requirements for the new year and how we are making it easier for you to record your CPD. We have also made some changes to the CFI Members Folder and Operations Manual to make it easier for you to find the information you need for your day-to-day mortgage business.

CPD

As mentioned previously, we are removing the blanket 40 hours of CPD and the requirements will now more closely align with the permissions you hold, full details of which can be found HERE.

Over the coming months, we will be continuing to build the CPD library on LMS to have additional lender-specific knowledge at your fingertips, together with more general industry and product oversight.

Any activities you complete within LMS automatically add CPD points to your record.

For CPD activities you undertake outside of LMS, e.g. external courses or events, or BDM visits to your office,  we have made it easier for you to record these.

In LMS you will find THIS COURSE which will allow you to select the amount of time the CPD activity was for and simply upload evidence of the activity to claim your time. You will see going forwards that when you have selected an amount of time and completed it that it will show as “completed”, but you can revisit it and complete it several times over the year (for example, you can complete multiple 60 minutes mortgage CPD sections over the year)

To avoid the rush at the end of the year for CPD points, the member support team will aim to remind you regularly where you are against your CPD targets, and provide guidance on how you can keep on track. Please remember, however, your CPD completion remains your responsibility and is a contractual and regulatory responsibility.

BOX CFI MEMBER FOLDER AND OPERATIONS MANUAL

To make it easier for you to find information needed to answer any questions you have about running your mortgage business, we have taken the PDF operations manual and moved it into individual pages in folders within the CFI member folder.

At the same time, some information has been added, removed and updated to make it the most comprehensive source of information from sales processes to commissions to compliance and more.

You can use the BOX search function to search for any files that contain the information you are looking for:

I’m sure you will all agree both of these are positive steps in supporting you with your business. If you have any questions, please contact member support for assistance.

If you have any questions, please contact member support for assistance. membersupport@connectbrokers.co.uk

Regards

Liz Syms, CEO

The Financial Conduct Authority (FCA) have published numerous articles in the past stating advertisements should be clear, fair and not misleading. More recently though they have released a warning to Lenders and Brokers to stop using misleading terms in their advertising or face regulatory action.

The statement they produced is aimed at those promoting credit, of which they wrote to almost 28,000 consumer credit firms warning them not to use terms such as ‘no credit check loans’, ‘loan guaranteed’, ‘pre-approved’ or ‘no credit checks’. However, if you produce an advertisement promoting any other type of credit facility such as to pay for an insurance plan, mortgage or equity release product then it is worth taking note of the points they raised.

Financial Promotion Tips

Due to the rising cost of living the FCA have set out their plans to protect and support consumers in consumer credit markets. They also have a three-year strategy including a focus on driving up standards and making firms put consumers’ needs first. As part of the Consumer Duty, coming into force from July 2023, they promote that communications, including financial promotions, must be clear so consumers can understand both the benefits and risks of a product.

• If you produce an advert promoting any type of lending, there are some key points you should consider:
• The borrowing shouldn’t be made to look easier or less risky than it is;
• Nor, should it seek to exploit customers who are seeking help through the cost of the living crisis;
• The article should provide a balanced picture of the borrowing, including both features and risks associated in equal prominence;
• The FCA also expect firms not to give consumers the impression that they will automatically get a loan if they apply, or that they can get a loan without the Lender checking they can afford it.

The FCA is continuing to monitor online advertising and if a firm fails to comply, the FCA have announced that they will take action. This could lead to banning adverts or requiring firms to change or withdraw them. Or, even worse, they could remove a firm’s permissions to engage in regulated credit activities.

We review lots of financial promotions every year. We not only review them with our compliance hat on, but also as a customer. Because of our knowledge of the industry this can be tricky as we can often see what a firm is trying to say. However, we always consider how a consumer, who has little knowledge of the financial services market, would read it. Where we come across scenarios where the message isn’t clear, we always try to provide guidance and suggested text so that the firm can tweak the article.

So when producing a promotion, consider what message you are trying to make. Is the promotion balanced, i.e. it says the benefits and the risks. Avoid exploiting someone’s vulnerability (even where this is not the intention). Also if you’re in the mortgage or equity release market, ensure you include the usual risk warnings and they are prominently displayed.

Finally, remember; each article must be compliant in its own right. Including a link to another page in your website, would fail to meet this requirement as not all consumers will click on a link to read the T&C’s.

Compliance Check

Please remember to send all Advertising and Financial Promotions to compliance@connectmortgages.co.uk for approval, before being made available in the public domain.

Regards

Liz Syms, CEO

We have recently updated some of the Compliance File Review Process to provide more information and clarity.

You may recall seeing the tab called ‘compliance’ in each case on OMS. This tab has been recently revamped so that it mirrors the checks that the compliance T&C team are completing when they review your files.

Where remedial actions are needed, these will clearly show in the box on the top right of the page. The relevant compliance check section will explain why the element has not met the standard.

There are three types of guidance:

• Grading Remedial action
• Items to fix
• Training observation

Only the grading remedial actions are the ones that have contributed to the red, amber or green rating you have been given on the file review.

The items to fix remedial actions are those that you need to fix, but have not contributed to the grading. The training observations do not contribute to your grading, but you should look to ensure they are addressed in future cases to protect yourself from complaints or compliance risks.

Green, Amber Red Rating

As you are aware, each file is given a red, amber or green rating, which is explained in more detail as follows:

Green is where you have met all the minimum standards on the file. There may still be some non-graded remedial points which should be actioned or some training notes to consider for future cases

Amber is where the minimum standard is not met, and there are some errors. This may mean the file may not withstand a compliance challenge from the FCA or the file could expose you to an upheld complaint.

Red is where there is clear client detriment caused by wrong advice, or the case is found to be fraudulent.

The team are also working very hard on file-checking consistency so that regardless of the person reviewing your file, you are getting consistent guidance on expectations. This is a challenge as each case is different, and advice issues can be subjective.

We are more than happy for you to question any decision. Still, with the new transparency on what is being checked and the detail around why a particular rating was given, we hope you will find this will benefit you in achieving regular green passes.

Regards

Liz Syms, CEO

Any Questions or Queries Contact :  compliance@connectmortgages.co.uk