At the start of 2025, the Financial Conduct Authority sent out a Dear CEO letter setting out its strategy for mortgage intermediaries. Ultimately, the purpose of the letter was to underline just how central the Consumer Duty now is to the provision of mortgage advice. Not only that, but the FCA made it clear that this meant “tailored advice […] suitable products, and high standards.”
All brokers strive to these standards, and the majority have always done so. Yet what this letter highlighted in particular was the effect of the current economic situation on intermediaries’ role in identifying borrowers’ individual needs. Specifically, vulnerability.
The depth of the fact-find process is vital to both understanding those needs and pre-emptively being aware of how circumstances might change but also, crucially for brokers, that they have fully documented evidence that the customer was given tailored advice.
This goes far beyond asking questions such as, do you plan to move within the next five years, are you expecting to grow your family or to care for an elderly relative in the near future. What wealth do you have in place, do you have bandwidth on affordability. What are your job prospects.
Increasingly, it means digging deeper into their worries and anxieties as well as their hopes. The reality at the moment is that the economy is such that job losses are a very real possibility for a large number of PAYE employees, following April’s rise in employers national insurance contributions. Property values in some parts of the country are more vulnerable to falls.
The FCA has been explicit: “In the first charge market, we want to see firms do more to ensure customers have considered their options. Firms must consider customers’ personal and financial circumstances, financial objectives, and provide appropriate information to enable them to make effective decisions.
“This may include probing customers’ stated preferences and exploring any trade-offs with those who express contradictory or conflicting needs.
“In the second charge market, we have seen some firms failing to consider whether a secured loan is appropriate for customers in financial difficulty. Recommending products without considering the costs associated with increasing the repayment period and whether it is appropriate for the customer to secure those debts could cause harm.”
Revisiting the regulator’s words is a helpful reminder of what intermediaries must consider carefully when deciding how best to manage their businesses. Compliance is an increasingly heavy burden – mainly insofar as it requires a huge amount of time and paperwork. The use of more efficient and comprehensive CRM systems is critical for firms managing their productivity – more cases completed means less time spent on the administrative responsibilities that sit behind each one.
This matters for directly authorised firms especially.
There is no right choice between going DA or remaining an appointed representative – it depends on the broker’s ambitions, experience, and appetite for responsibility. With increasing scrutiny from the regulator, though, the decision is now more complex. It is no longer a question of autonomy; firms now have to consider more carefully their long-term business resilience, compliance, and the ability to adapt to new regulatory and technological expectations.
Until very recently, the split between AR and DA has been binary – you are one or you are the other. But that’s changing. As with other sectors, the mortgage advice market can increasingly offer brokers more choices in the area that sits in between the two models.
Cloud-based technology systems and a more modular approach to the services offered by mortgage clubs are driving this shift. For many start-ups or smaller firms, the appointed representative model offers an attractive launchpad. Networks are geared up to providing ARs with ready-made infrastructure, back-office support, regulatory cover, and technology. Firms have access to business development support, training programmes and enjoy the benefits that being part of a large organisation brings, both in the commercial terms they have the clout to agree with lenders and also the credibility that a big brand brings from a consumer point of view.
Making the transition to DA status can be daunting – it’s a stark difference. The upsides for more experienced brokers or those with a clear vision for their business are diverse. There is freedom to make independent decisions on proposition, strategy, and provider relationships. Specialisms are easier to manage when you are not restricted by network policies.
But DAs must also manage compliance, professional indemnity insurance, and regulatory reporting themselves. They need to understand and implement FCA requirements in full—something that demands both time and expertise. It’s also expensive.
At TMA, we think there’s a stage in between.
We have developed a mortgage club offering that provides the best of both worlds – and it’s not a one size fits all decision.
As part of the larger LSL group and LSL Financial Services, we have strong links with Primis and the ability to access the advantages they bring by being the UK’s largest mortgage network. TMA can offer compliance tools, training events, file checks, and CPD. The hybrid approach means DAs can access the expertise and reassurance of a larger organisation while maintaining their business’ autonomy.
When the chips are down, the AR vs DA decision is not just about regulatory structure. It is about ensuring brokers can deliver what really matters: high-quality, customer-centric advice that stands up to both client expectations and regulatory scrutiny.
Rob McCoy is senior product and business manager at TMA
