Mortgage Broker and Adviser Insurance

In regulated advice, what you recommended matters less than what the file shows about why, and complaints are decided on that.

A suitability complaint asks whether the recommendation was right for the client's circumstances, objectives and tolerance at the time. Years later, the client's recollection of their own priorities will have been reshaped by what happened since: a rate rise, a change of job, a relationship ending, a property that did not appreciate. The only account that does not change is the one written at the time, and if the file records the client's circumstances, what they said mattered, what alternatives were considered and why the recommendation followed, the complaint is answerable.

Which makes the fact find and the suitability letter the two most valuable documents in the business. Capture circumstances properly rather than minimally, record the client's stated objectives in their terms, note what was discussed and ruled out, and explain the recommendation in language the client would recognise rather than in regulatory phrasing. Where a client insists on something against your recommendation, record the recommendation, their decision and that they were told the implications.

This is the difference between mortgage broking and most other professional liability, and firms should plan for it rather than discover it.

A client who is unhappy complains to the firm, and if it is not resolved they refer it onward. The decision is made on what is fair and reasonable in the circumstances, which is a broader test than legal negligence; there is no trial, no cross examination, and the usual limitation defences do not apply in the way they would in court. An award can be made against a firm that would have had a defensible legal position. The process also costs time and management attention regardless of outcome.

So complaint handling is itself a risk control. Respond within the required timescales rather than late, address what the client actually complained about rather than the easiest point, keep the complaint file as carefully as the advice file, and notify your insurer early rather than once a decision has gone against you. Firms that treat early complaints as a nuisance to be deflected tend to meet the same complaint later in a forum where deflection does not work.

Mortgage complaints cluster around affordability, and the difficulty is that circumstances move after the advice is given.

A recommendation is based on income, outgoings, employment and plans as they were. Then a self employed client's income falls, a couple separates, a fixed rate ends into a higher market, an interest only term runs out with no repayment strategy, or a buy to let stops covering its costs. The client's position is frequently that the borrowing was never affordable or that nobody explained the risk. Interest only and later life lending are particularly exposed, because the consequence arrives at the end of a term rather than at the start.

Which puts the emphasis on documenting the risk conversation rather than only the arithmetic. Record what was explained about rate rises and what happens at the end of a fixed period, record the repayment strategy for any interest only element and that it was discussed rather than assumed, record stress assumptions, and note where a client's plans depended on something uncertain such as a bonus, an inheritance or a future sale. Those notes are what separate unaffordable advice from a change of circumstances.

There is a specific fraud exposure here that has nothing to do with advice, and it is worth naming because the sums are large.

A mortgage broker's email traffic reveals who is buying what, when funds are moving, which solicitor is acting and roughly how much is involved. That is exactly the information needed for an impersonation fraud: a message appearing to come from a broker or a solicitor, with changed account details, intercepting a deposit or a completion payment. The client loses a life changing sum, the parties argue about who bears it, and the firm whose mailbox was compromised is in the middle of it. Mortgage files also hold identity documents, bank statements and payslips for every applicant, which is a serious data exposure on its own.

Controls are ordinary and they work: multi factor authentication on email without exception, a rule that payment details are never confirmed or changed by email, warning clients in writing at the outset that account details will never change by email, and a documented process for verifying any such request by phone to a number held on file. Then check the cyber wording, because social engineering and funds transfer fraud are commonly sub-limited far below the headline figure.

The policy has to satisfy a regulator as well as protect you. We are an FCA regulated broker and will not tell you we are the best choice. These are the questions that decide it.