This section provides a little information about mortgage and protection advisers, what you should know about them and what they should tell you.
- Mortgage advisers must be qualified. The most common qualification is the certificate of mortgage advice and practice (CeMap). There are three parts to the qualification and an adviser will have all three parts. There are other acceptable qualifications for example, the Mortgage Advice Qualification, usually held by those who also have financial planning qualifications. There are also advanced or extra qualifications. To advise on Equity Release, an adviser must have taken and passed the Certificate in Regulated Equity Release examination.
- Being a mortgage adviser is a regulated job which has huge implications in regard to qualifications and standards of behaviour. Advisers are assessed as “fit and proper” before they are ever allowed to practice. This means that before being authorised, they have been approved to the standard set by the regulator. This means detailed checking of things like, financial probity, employment history , qualifications, etc. The Financial Conduct Authority(FCA) set the rules for regulated advisers no matter what type they are, the rules are the same. See next point.
- Advisers are classed as “Restricted” or “Independent”
- Restricted means they work from a pre-approved panel of lender and insurers. Panels can be large, ours has over ninety lenders and ten plus insurers. Sometimes known as representative of whole of market. Restricted panels often have off-panel facilities, when required. Meaning if we cannot find a perfect product on the panel, we go somewhere else, not on panel. Mostly it is not required.
- Independent should mean they can go anywhere to find a solution, no panels at all.
In practical terms being restricted or independent makes little real difference, both are qualified to the same standard with the same exams. Using an adviser is a relationship based on trust and expertise, if your adviser provides that, you are onto a winner.
Having established how advisers divide from a regulatory perspective, there is another division you should know about. Both Restricted and Independent advisers can either be members of Networks, where they are known as Appointed Representatives (Businesses owners typically) or Registered Individuals (They work for a business), or they can choose to be directly supervised by the FCA, known as Directly Authorised. There are other divisions, but today, these are the main ones.
- An Appointed Representative can be Restricted or Independent, a firm or a sole trader, whose regulatory guidance is provided by a third party, a service provider, advisers who work for an Appointed Representative are known as Registered Individuals. The third-party service provider is referred to as a Network. The service provider rather than the adviser, is directly regulated by the FCA.
- A Directly Authorised business is a firm or a sole trader who can be either Restricted or Independent and they are directly regulated by the FCA, with no third party involved. Advisers who work for a directly authorised firm are also known as Registered Individuals.
- Networks are popular and considered safe. They impose high standards of compliance and working practices because they are responsible for the advice given.
- Directly Authorised businesses can set their own standards, which may be better, or not, than a network, and are liable for the advice they provide.
- If a mortgage adviser works for a firm as a registered individual, they will not be listed on the FCA Register.
- If they are the principal of their own firm, you should find them on the FCA register, although if part of a Network, they will only be visible under the Network’s name.
- If you are in any doubt about the authenticity of your adviser, ring the firm they work for to verify their credentials, check the FCA register or ask for references.
Advisers must always provide you with terms of business before transacting business on your behalf which must also include an authority to proceed letter to be signed by you, the consumer. These will explain who they work for, what they charge and when, and their regulatory status, either Independent or Restricted.