Referral fees for mortgage brokers: what you can accept and how

Many mortgage brokers assume referral fees sit in a regulatory grey area, so they pass clients on for free or avoid the conversation altogether. The reality is more straightforward. FCA-authorised firms can receive referral income for introducing clients to other regulated firms, provided the arrangement is handled properly. The core requirements are ones you already live with every day in mortgage work: act in the client's best interests, avoid conflicts you cannot manage, and be transparent about remuneration.

What trips brokers up is not the principle but the practicalities — knowing what to disclose, when to disclose it, and how to document it. That is where most informal arrangements fall down, and it is exactly the gap a properly built referral network is designed to close. Before you accept any referral income, check your own regulatory permissions and disclose to your client — a good network's process handles the paperwork.

The consistent expectation across FCA rules and good practice is disclosure: the client should understand that you may be paid for the introduction. Handled well, disclosure is not awkward — it is a mark of professionalism. Clients expect professionals to have networks, and research consistently shows people prefer a recommendation from someone they trust over searching cold.

The problem with DIY arrangements is that disclosure tends to be verbal, inconsistent, or forgotten. If a complaint ever surfaces, you want a written record. SmartPeer generates a disclosure letter for every referral automatically, so each introduction carries its own compliant paper trail without you drafting anything. You stay in control of the client relationship; the documentation simply happens.

Strip away the jargon and a well-run referral has four features:

• Client consent first. On SmartPeer, every referral is consent-based — the client opts in online before any contact is made. Nobody rings your client out of the blue.
• A vetted destination. Introductions go to vetted, regulated advice firms and carefully selected specialists, not to whoever happens to pay the most.
• Written disclosure. The automatically generated disclosure letter tells the client that you may receive a fee.
• A record you can evidence. Live tracking from introduction to completion means you can show exactly what happened and when.

Compare that with the classic informal arrangement — a name scribbled on a business card, no consent trail, no disclosure, no idea whether the client was ever seen. One of these survives scrutiny. The other does not.

A few habits are worth retiring if referral income is going to be a proper part of your practice. Do not accept undisclosed payments — an arrangement your client does not know about is a conflict waiting to be found. Do not stray beyond your permissions: introducing is fine, but do not drift into advising on products you are not authorised for, particularly investments and pensions. And do not promise outcomes on behalf of the receiving firm — your role ends at the introduction, and the advice responsibility sits with the regulated firm that takes it on.

None of this is onerous. It is the same discipline you already apply to procuration fees and insurer commission, extended to the rest of the client's financial life. Check your own regulatory permissions, disclose to your client, and let the network's process do the administrative heavy lifting.

On SmartPeer, joining is free and there are no monthly fees, so there is no cost base to recover before a referral pays. When a client you introduce proceeds with one of the vetted, regulated advice firms in the network, an introducer fee is generated and members keep 60–70% of it. You can watch each referral move from introduction to completion in live tracking, and commission statements reconcile against what you can see on screen — no chasing, no guesswork about whether a case ever completed.

For a broker completing mortgages every month, that is a genuine second income line built from conversations you are already having. The clients get advice they were going to need anyway, from firms that have been vetted; you get paid, compliantly, for the trust you have already earned. If you have been giving those introductions away for free, the only real question is why.