Mortgage Broker Compliance: FCA Requirements and Costs
Learn what the FCA expects of mortgage brokers, what the £2,820 application fee covers, and which Consumer Duty and disclosure evidence the FCA reviews when it assesses...
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FCA Regulated • MCOB ComplianceMortgage Broker Compliance Consultants
Permissions, advice standards and MCOB controls for mortgage firms.
Comprehensive FCA authorisation and MCOB compliance support for mortgage brokers and advisers. Whether you're providing advice or arranging mortgages, we help you navigate regulatory requirements and build a compliant mortgage business.
SERVICE OVERVIEW
Mortgage Broking Authorisation and Compliance
Support mortgage firms with permissions, advice standards, customer documentation and ongoing MCOB controls.
Mortgage advisers, brokers and firms reviewing advisory or non-advisory models. A practical compliance framework for advice, arranging, records and customer outcomes.
Evidence we help you build
- Mortgage permissions and service model
- Advice and suitability framework
- Customer documentation and disclosures
- File review, monitoring and MI
Typical timeframe
Ready to submit within 6 weeks, often sooner
Under FSMA the FCA must decide within 6 months of receiving a complete application, or within 12 months of receiving an incomplete one.
Ideal for
- Mortgage advisers
- Mortgage brokers
- Firms reviewing advisory or non-advisory models
Service models
- Advisory Services
- Non-Advisory Services
How MEMA helps you
- FCA Authorisation
- MCOB Implementation
- Ongoing Advisory
Mortgage Advisory & Arrangement Services
Understanding the difference between advisory and non-advisory mortgage services
Advisory Services
Providing mortgage recommendations and advice
When you make a personal recommendation to a customer about a mortgage
Key features
- Personal mortgage recommendations
- Suitability assessments required
- Scope of service: whole of market, a limited panel or a single lender
- Enhanced disclosure requirements
- A suitability record for each recommendation
Requirements
- Qualified mortgage advisers (CeMAP or equivalent)
- Detailed suitability reports
- Comprehensive fact-finding
- Product research and selection
- Consumer Duty fair value assessments
Non-Advisory Services
Arranging mortgages without personal recommendations
When you arrange mortgages but don't provide personal recommendations
Key features
- Mortgage arrangement services
- Application submission support
- Product information provision
- Limited disclosure requirements
- Execution-only only where MCOB 4.8A allows it
Requirements
- Clear disclosure of non-advisory status
- Product information provision
- Application processing capabilities
- Customer understanding documentation
- Appropriate staff competence
How MEMA Supports Mortgage Brokers
End-to-end support from authorisation through ongoing compliance
FCA Authorisation
Complete application support for mortgage permissions
- Permission selection guidance
- Business plan development
- Application preparation and submission
- FCA query management
- Post-authorisation setup
MCOB Implementation
Embedding MCOB requirements into your processes
- Policy and procedure creation
- Documentation templates
- Compliance monitoring frameworks
- Staff training programmes
- Quality assurance systems
Ongoing Advisory
Continuous regulatory support and guidance
- Regulatory change monitoring
- Compliance health checks
- Variation of permissions support
- FCA correspondence assistance
- Remediation project guidance
What Mortgage Broker Compliance Involves
FCA compliance for mortgage brokers is governed principally by the Mortgage Conduct of Business sourcebook (MCOB), overlaid by Consumer Duty and the Senior Managers and Certification Regime. Here is what staying compliant involves in practice.
1. Advice, suitability and affordability
Most mortgage sales are advised, which means a personal recommendation that must be suitable for the customer's needs and circumstances under MCOB 4. Firms must assess affordability, evidence the basis for each recommendation, and keep suitability records that stand up to FCA review.
2. Disclosure and Consumer Duty
Customers must receive clear, timely disclosure, including the European Standardised Information Sheet (ESIS). Under Consumer Duty, firms also have to show that customers receive fair value and good outcomes, not simply that the MCOB process was followed. We help brokers evidence their fair value assessments and consumer-understanding obligations.
3. Governance, permissions and reporting
Mortgage firms must hold the right permissions, meet their SMCR obligations, run compliant financial promotions, handle complaints under DISP, and submit accurate regulatory returns. Our consultants build the compliance framework and provide ongoing oversight so these obligations are met continuously, not just at the point of authorisation.
Managing Your Mortgage Permissions
Understanding and maintaining the right FCA permissions for your business model
Mortgage Types
Different mortgage permissions available
- Residential mortgages
- Consumer buy-to-let (registration under the MCD Order)
- Equity release (lifetime mortgages)
- Home reversion plans
- Second charge mortgages
Permission Scope
Defining your business activities
- Advising on regulated mortgages
- Arranging regulated mortgages
- Whole of market vs panel
- Direct authorisation vs appointed representative
- Additional lending permissions
Ongoing Compliance
Maintaining your permissions
- Variation of permissions applications
- Threshold conditions maintenance
- Regulatory reporting obligations
- Competence and qualification updates
- Consumer Duty implementation
MCOB Compliance Requirements
Navigating the Mortgages and Home Finance: Conduct of Business sourcebook
Customer Documentation
Required disclosures and documentation
- Initial disclosure documents
- Services and fees disclosure
- Mortgage illustrations (ESIS)
- Suitability reports (advisory)
Customer's Best Interests
Acting in the customer's best interests
- Fair value assessments
- Whole of market considerations
- Remuneration disclosure
- Conflict management
Responsible Lending
Affordability and creditworthiness
- Affordability assessments
- Income and expenditure verification
- Credit checks and scoring
- Vulnerable customer identification
Product Governance
Mortgage product oversight
- Target market identification
- Product distribution arrangements
- Fair value monitoring
- Product review processes
Advice Standards
Quality of mortgage advice
- Comprehensive fact-finding
- Suitability assessments
- Product research and selection
- Clear suitability reporting
Records & Monitoring
Ongoing compliance evidence
- Customer file maintenance
- Compliance monitoring programmes
- Quality assurance reviews
- MI and reporting
Key Mortgage Broking Compliance Requirements
What the FCA expects, and the evidence behind it.
Permission scope
Map advice, arranging and mortgage activities.
Advice standards
Review suitability, recommendations and records.
Customer support
Test communications, vulnerability and outcomes.
Monitoring
Create file review, MI and remedial action.
What you will need to produce
- Mortgage permissions and service model
- Advice and suitability framework
- Customer documentation and disclosures
- File review, monitoring and MI
Make advice and suitability auditable
The mortgage journey should connect customer needs to the recommendation and the record.
- MCOB scope
- Map advice, arranging, execution-only and other mortgage activities.
- Recommendation rationale
- Evidence needs and objectives, affordability, suitability, disclosures and outcomes.
- Customer support
- Cover communications, vulnerability and customers in payment difficulty.
Use file and outcome testing
Monitoring should show where the journey works and where it needs correction.
- File reviews
- Test fact-find, advice, records, disclosures, communications and follow-up.
- Consumer Duty
- Assess fair value, understanding and support alongside MCOB process compliance.
- MI and action
- Report themes, complaints, outcomes, owners and evidence of remediation.
Essential Requirements for Mortgage Brokers
Critical compliance areas for mortgage broking businesses
- Appropriate FCA permissions
- Qualified mortgage advisers (CeMAP or an equivalent appropriate qualification)
- MCOB-compliant documentation
- Consumer Duty implementation
- Professional indemnity insurance
- SM&CR compliance
The Mortgage Broking Compliance journey
The route from scoping your permissions to a decision. The FCA's part of it is fixed; the preparation before it is where applications are won or lost.
- 1Confirm your home-finance permissionsAdvising and arranging are separate, and first charge, second charge, buy-to-let and later-life lending each change the permission you need.
- Establish which home-finance activities you carry on
- Confirm the product types your permission has to cover
- Weigh direct authorisation against appointed representative status
- 2Build the advice and suitability frameworkA mortgage application is assessed on whether advice can be shown to be suitable, so the file has to hold the reasoning and not only the outcome.
- Build the advice process and suitability evidence
- Prepare customer documentation and disclosures
- Set up file review and the management information behind it
- 3Submit to FCASubmitted through the FCA's Connect portal with the application fee of £2,820.
- Complete submission through Connect
- Application fee paid at submission
- Case officer assigned by the FCA
- 4FCA reviewThe statutory determination period is 6–12 months — six months for a complete application, twelve if it is incomplete when submitted.
- Case officer raises questions on the submission
- Further information requests answered and evidenced
- Weak responses, not complexity, are the common cause of delay
- 5Permission grantedPermission is granted and the firm can carry on the regulated activity, subject to any requirements attached to it.
- Permission recorded on the Financial Services Register
- Any limitations or requirements confirmed
- Reporting and supervision obligations begin
Related FCA Guidance
Deeper reading on the regulatory framework behind mortgage broking.
- MCOB: Mortgage Conduct of BusinessThe FCA rules governing mortgage advice, disclosure, and responsible lending.
- FCA Authorisation PreparationStep-by-step guide to preparing a complete FCA authorisation application.
- PERG: Perimeter GuidanceUnderstanding which activities require FCA authorisation and which are exempt.
Sectors We Support
This service is available for firms across these regulated sectors
Explore our other services
End-to-end support across the full regulatory lifecycle.
Frequently Asked Questions
Common questions about mortgage broker compliance
Do I need to be FCA authorised to broker mortgages?
Yes. Arranging or advising on regulated mortgage contracts is a regulated activity, so mortgage brokers must be either directly authorised by the FCA or an appointed representative of a principal firm. Section 19 FSMA prohibits operating without the right permission, and section 23 makes contravening that prohibition a criminal offence. MEMA helps brokers choose between direct authorisation and appointed representative status, and prepares the application either way.
What is MCOB?
MCOB is the FCA's Mortgage Conduct of Business sourcebook, the rulebook governing how firms sell and administer regulated mortgages. It covers advice and suitability (MCOB 4), affordability and responsible lending, pre-sale disclosure including the ESIS, charges, and the treatment of customers in payment difficulty (MCOB 13). Mortgage brokers must be able to evidence compliance with MCOB across the full customer journey.
How has Consumer Duty changed mortgage broker compliance?
Consumer Duty raised the bar from following MCOB processes to demonstrating good customer outcomes. Mortgage brokers now have to evidence fair value, consumer understanding and appropriate support, not just that a suitability assessment was completed. In practice that means documented fair value assessments, clearer customer communications, and management information showing outcomes are monitored. Firms that treat MCOB as a tick-box exercise are the most exposed.
Can you provide ongoing compliance support for a mortgage brokerage?
Yes. Alongside FCA authorisation and MCOB implementation, MEMA provides ongoing compliance support for mortgage brokers: file reviews, financial promotion sign-off, complaints handling under DISP, regulatory reporting, and SM&CR administration. Retained support is cost-effective for smaller brokerages that face the same obligations as larger firms but cannot justify a full-time compliance hire.
Ready to Build Your Mortgage Broking Business?
Contact our mortgage broking specialists for expert FCA authorisation and MCOB compliance support
Phone: 0330 133 0811
Email: contact@memaconsultants.com