Referral fees for mortgage brokers: what the rules actually say

Every mortgage broker discloses remuneration constantly: the procuration fee — typically around 0.35% to 0.40% of the loan on residential cases — sits in the disclosure documents as routine. Referral fees are the same discipline pointed in new directions. Paying an estate agent or accountant for introduced clients is permitted. Receiving a fee for referring a client onward — to a conveyancer, a protection specialist, a wealth adviser, an estate planner — is permitted too. The FCA's interest is not in stopping the payments but in three questions: does the arrangement create a conflict with the customer's best interests, is it disclosed clearly enough for the customer to weigh it, and does it survive the Consumer Duty's demand for good outcomes? Answer those on paper and referral income is just another disclosed revenue line.

The riskiest referral money is the money you pay out, because introducers can behave badly in your name. The FCA has warned authorised firms repeatedly — including in its 2019 statement on introducer risk — that firms bear responsibility for business sourced through third parties. If an unauthorised introducer strays into advising, pre-sells a product, or ships you clients acquired through misleading promises, the regulatory consequences land on the authorised firm. Due diligence is therefore not optional courtesy: know who your introducers are, put the arrangement in a written agreement that bans them from advising, sample-check what clients were actually told, and pay per genuine introduction rather than per completion where the structure might pressure outcomes. A £200-per-case arrangement with a sloppy introducer is the most expensive cheap marketing available.

A mortgage transaction is a full financial inventory conducted at speed — which is why brokers spot needs nobody else sees. The buyer with no will. The self-employed applicant with no income protection. The remortgaging landlord with a pension question. Referring those clients to authorised advisers or qualified specialists, for a disclosed fee, is lawful and often the most useful thing a broker does that month. The disciplines: stay inside your permissions (a mortgage permission is not an investment advice permission), disclose the fee to the client in plain figures, and pick counterparties you would let advise your own family. SmartPeer runs this rail for professionals — tracked referrals to vetted advisers and estate planners, with the disclosure letter generated per referral. However routed, the same file rule applies: every referral logged, every fee visible, every counterparty vetted and re-vetted annually.