Anytime an Appointed Representative (AR) joins Connect, they are given an FCA number, whether they conduct regulated activity or not. There are many advantages to this, which will benefit your business, your clients and us as a Network.
Benefits for a Mortgage Adviser
Legitimacy & Trust – Being an FCA authorised firm gives you credibility, showing clients that the adviser meets regulatory standards. To have an FCA number, an adviser must be assessed as Fit and Proper and continue to evidence these standards. The adviser must conduct some regulated activity in order to warrant their FCA number. The FCA has concerns of customers believing they are dealing with an authorised broker. However, the broker is conducting that business as a non-regulated broker
Access to a Wider market – Many lenders will only work with FCA-regulated advisers, expanding the range of mortgage products available to them even if the product is non-regulated.
Compliance with Industry Standards – Ensures the adviser follows ethical and professional standards, reducing the risk of misconduct.
Consumer Confidence – Clients feel more secure knowing the adviser is regulated and must act in their best interests.
Ombudsman Access – If disputes arise (from regulated products), clients can escalate complaints to the Financial Ombudsman Service (FOS) for a fair resolution.
Legal Protection – Advisers are required to follow FCA rules, which help safeguard both them and their clients from fraud or malpractice.
Protection for Clients
Fair Treatment – FCA-regulated advisers must adhere to the FCA’s Consumer Duty and Treating Customers Fairly (TCF) principles.
Transparent Advice – Advisers must disclose fees, commissions, and any potential conflicts of interest.
Redress & Compensation – If an adviser gives bad advice that causes financial loss, clients may claim compensation through the FSCS.
Regulatory Oversight – The FCA regularly monitors and can take action against advisers who breach rules, including fines or bans.
PI – The PI cover that Connect AR’s benefit from only covers business conducted under the FCA authorised business.
Why it is important that all business is conducted under your FCA authorised business?
Whilst most lenders will only accept business from FCA authorised brokers there are some that will take business from non-regulated brokers for non-regulated products such as bridging. However, as a Connect AR holding an FCA number, any business conducted outside would fall foul of the FCAs concern that the customer believes they are dealing with a FCA authorised broker and the benefits of such.
Whilst clients do not have the option of taking a complaint to the Financial Ombudsman Service (FOS) on non-regulated activity, they can still raise a complaint to the Network and take their complaint to the courts. For this reason, we still require all required documents to be on file, such as Terms of Business and Reasons Why Summaries, because without these, a complaint is very difficult to defend, likely meaning the complaint will go in the favour of the client and not the adviser. So, upholding these standards on non-regulated activity protects you, the adviser and us, the Network.
The risk for brokers conducting business outside of a FCA authorised business is that there is no protection, such as, no PI insurance, meaning that any redress from a complaint would mean that the adviser is personally liable.
Summary Actions
- Ensure you are meeting the requirements to maintain your FCA number
- Do not risk undertaking business outside of your FCA authorised business(s)
If you have any questions, please do not hesitate to contact the Compliance team, who will be happy to help: compliance@connectmortgages.co.uk
Regards
Alan Baldwin
Director of Compliance & Operations
For any questions or queries, contact the Compliance Team
Call : 01708 676110
Email : compliance@connectmortgages.co.uk