Mortgage Broker Compliance: FCA Requirements and Costs

At a Glance

Mortgage broker compliance starts with permission: mortgage brokers must either be authorised by the FCA or become an appointed representative of another firm that has the relevant permissions. Applicants for authorisation must read the FCA's how to apply page in full before submitting, pay the non-refundable application fee and submit through Connect. Most mortgage broker applications fall into Category 4, a fee of £2,820.

The FCA says you must demonstrate that you can consistently deliver good outcomes for retail consumers. It expects you to make the Consumer Duty a top priority, and it wants to see the actual Initial Disclosure Document you intend to give customers.

What Has Changed

Permission route

The FCA's page for mortgage brokers says brokers must either be authorised by the FCA or become an appointed representative of another firm that has the relevant permissions. A firm that wants to engage in regulated activities as a mortgage broker in its own right needs to be authorised, and the FCA's page explains how to apply. The page was last updated on 23/07/2026 with a system update that fixed a broken link.

Fee and payment

Your fee falls into pricing category 4. The FCA's application fees page says most financial advisers, mortgage brokers and general insurance intermediary applications fall into Category 4, at £2,820. You pay by credit or debit card through Connect, you must pay to submit, and the fee is non-refundable. It is separate from the FCA annual fee, which you pay each year once authorised, with only a proportion due in your first year.

Consumer Duty assessment

When it assesses your application the FCA reviews the processes and controls you have to ensure the products you recommend are suitable for your customers' needs. It also reviews whether your fees and charges represent fair value, and whether you have processes in place to check that providers have carried out a value assessment of their product and charges. It looks at how your communications, such as suitability letters, will aid customers' understanding of the products you sell and how you will evaluate the effectiveness of those communications.

Disclosure and honesty

You must answer all questions honestly, including on Form As, and give full information on any disclosures, including removals from lender or product provider panels. The FCA says that if you do not disclose something, it may consider that evidence of dishonesty and/or lack of integrity.

Mortgage broker application essentials

Who Needs to Act

Mortgage brokers need to act if they are not yet authorised and not an appointed representative of a firm that has the relevant permissions. Applicants for authorisation must pay the non-refundable fee and submit through Connect, after reading the how to apply page in full.

Firms proposing to carry out insurance intermediary or credit broker activities as well should review the FCA's correspondence for those sectors.

Evidence to Prepare

MEMA recommends treating the application as a build programme with an owner for each workstream, not a document-gathering exercise. The FCA asks for the regulatory business plan to explain permissions, customer sourcing and adviser supervision, and each depends on choices made elsewhere. Settle the sourcing model before drafting the plan, since introducer or lead generator arrangements affect due diligence and financial promotions. The Initial Disclosure Document is another dependency: the FCA wants to see the actual document, so wording, website journeys and adviser scripts should be aligned before it is attached. If you do not intend to issue one, you must set out how you will otherwise comply with MCOB 4.4A.1. A simple register mapping each FCA expectation to a plan section, a policy and a named senior manager makes gaps visible before final submission through Connect.

Decide which management information will be collected, who reviews it, and what action follows if it shows poor outcomes. Test a sample suitability letter with someone outside the advice team and record what changed. For vulnerability, agree how advisers identify and record customer needs. For fair value, decide how the firm will evidence its processes for checking provider value assessments. Disclosure needs a separate control: collect panel removals and Form A answers from every relevant individual, have a second person reconcile them, and keep the confirmations. If unsure whether something is relevant, the FCA says to tell it as much as possible.

What Firms Should Do Now

MEMA View

MEMA's view is that the board should decide the route to market before anything else, then test whether the firm can carry the responsibilities it chooses. Authorisation suits a firm that wants control over its propositions, panels and advice model and has the people to run compliance, supervision and monitoring. Appointed representative status may suit a smaller start-up, but it should be chosen on an honest view of dependence on the principal. The board should ask who is accountable for each plan commitment and whether senior managers can explain the business plan unaided. A short pack covering permissions sought, sourcing model, outcomes monitoring and disclosure reconciliation shows whether the application describes an operating firm or an aspiration.

We would ask for assurance at two points: before submission and before trading. Before submission, seek independent challenge of the business plan against the FCA's listed expectations, and a signed confirmation that every disclosure has been checked. Before trading, seek evidence that policies are live, advisers are trained, the Initial Disclosure Document is in use and management information is being produced. Specialist support is justified when the firm cannot show how introducers are vetted, when adviser supervision is untested, or when no one internally can challenge the Consumer Duty design.

If you're weighing authorisation against appointed representative status, MEMA's mortgage broking compliance support can build the application and Consumer Duty evidence with you.

For wider context, read our guidance on the FCA's 2026 compliance priorities.

Source Evidence

Plain English Glossary

• MCOB - Mortgages and Home Finance: Conduct of Business sourcebook. FCA Handbook section setting conduct rules for firms selling and administering regulated mortgages.

Disclaimer

This article is for general information only and does not constitute legal or regulatory advice. Firms should assess the application of regulatory requirements by reference to their permissions, products, customers and operating model.

How MEMA Can Help

MEMA's former regulators review your regulatory business plan, introducer due diligence and Initial Disclosure Document against what the FCA says it will review. We also test your Consumer Duty evidence and disclosures before you pay the fee and submit on Connect. Book a free scoping call.