FCA Positive Compliance – Mortgage Session

As part of their Live and Local programme, the FCA has been running a series of Positive Compliance workshops to guide mortgage advisers on how best to deal with the advice process. 

Although much of the feedback will come as no surprise, the following summary should be useful. 

There has been a lot of positive feedback on these workshops, and other events in the Live and Local programme. They are undoubtedly extremely worthwhile. There are still workshops available throughout various parts of the UK up until March 2017, which can be accessed by clicking here and following the registration process.

The main objectives of the workshop were: 

  • Consider the current mortgage market landscape;
  • Understand the findings of thematic review TR15/9: Embedding MMR – Advice and Distribution;
  • Consider the balance of regulatory and customer requirements;
  • Enable firms to consider their own processes against what the FCA have seen in practice;
  • Refresh knowledge on other relevant areas. 

 MMR thematic methodology and findings

  • Published July 2015;
  • Mixture of mystery shopping, file reviews and firm visits;
  • Cross section of firm types;
  • Based on independent consumer research;
  • Outcome of reviews …
    59% Suitable, 38% Unclear and 3% Unsuitable;
  • Evidence that advice is being delivered at extreme ends of the spectrum, for example a 2-hour rigid process where the client was “switching off” versus a 10-minute process which seemed rushed.

Advice Process

  • Files should be clear enough such that any adviser could pick up the file of another adviser and be able to carry it through the sales process to the conclusion of the sale;
  • The first thing the FCA looks at when conducting a file check is the fact find. From this document, the advice should more or less speak for itself and come as no surprise, with the SR being merely a confirmation of the KYC information gathered at the fact finding stage; 
  • A main area of concern was the process itself (or lack of one) – firms, particularly larger ones, should have a documented process to drive consistency between advisers;
  • Disclosure – firms should try and make this more engaging for the client by simplifying the language. A good tip is to have a third party to read through the document in order to minimise jargon – this could be deemed a good example of TCF. Firms should also position the document more positively with client, for example, “I’m going to do this…. that’s important because…”. Firms should even use it as an opportunity to “blow their own trumpet”;
  • Fact find/KYC information – general lack of client objectives/drivers and taking into consideration the clients’ knowledge and experience e.g. 1st time buyer versus serial mover. Lack of soft facts, the example given here was that a fact find will generally always have the NI number, but rarely will it have the reason for moving house;
  • Suitability Reports – the three main requirements are demands/needs, why suitable and risks. Reports should not be seen as a “tail covering” exercise. Write it for the client, not for the FCA or FOS.

Other relevant areas 

MI – should be Seen, Challenged, Analysed, Actioned, Recorded;

File checking: what the FCA look for (not exhaustive)

  1. Mortgage repayment method;
  2. Product features;
  3. Evidence of debts (for debt consolidation cases);
  4. Was a Suitability Report issued?
  5. Affordability and how this is documented.


Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

The FCA are doing their utmost to reach out to advisory firms by running the Live and Local sessions of which the Positive Compliance Workshops are a big part.

The FCA has given clear indication of its expectations around mortgage advice and what the focus will be when checking a firms’ mortgage advice process, so be prepared and ensure your standards match their expectations.

Action Required By You

  • We strongly recommend that you review your mortgage advice process to ensure all of the above points are being addressed;
  • We recommend you attend any of the remaining workshops;
  • Most of the feedback should come as no surprise but you should nevertheless read through the points raised in the feedback and address any that require action;
  • Discuss the findings with the senior management team and of course document the discussions and outcomes;
  • We recommend that you take the opportunity to read the Thematic Review TR15/9: Embedding MMR – Advice and Distribution;


ATEB clients should speak with their account manager as necessary; otherwise contact ATEB here to find out how we can help.

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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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