Special Features

How to stay compliant when dealing with introduced business

Graham Wilson | Director of TrackerHUB
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20th February 2019
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"Introduced business is absolutely key to any growing mortgage brokerage firm, however the compliance aspect of any arrangement needs to be adhered to"

It is extremely important that we adhere to FCA guidelines around Know Your Customer, especially in today's market with first-time buyers, investors and home movers being key to our introducer business.

Almost as important as KYC is to also Know Your Business and to understand exactly how third party introducers source and introduce clients to their mortgage broker.

It is our responsibility as a broker to verify an introducer via due diligence and assessment of stability around the lead business. It's imperative that the introducer is not under duress which may hinder any B2B relationship and could provide a significant risk to a broker company.

FCA guidelines around third party introducers are vague, however DAs and ARs must be fully aware of their business and lead sources in order to be assured that no fraudulent transactions are being passed over and that the lead source is completely viable and transparent.

I have been working alongside estate sgents, sccountants and solicitors for over eight years and they have been a key source of revenue whilst also adding to the growth of our intermediary company.

Within Options Mortgage Centre we have over 40 estate agents who are all vetted and we stay in constant contact with them via real-time updates using our TrackerHUB system. This system also provides key data showing exactly who is introducing what business at specific moments in time and we have also been able to spot trends in the market that now help us to plan strategically across the coming months with total visibility of our introduced pipeline stream.

The key pillars of a good governance arrangement for third parties are:

- Clarity of roles and expectations
- Detailed due diligence and on-boarding of third parties
- Proportionate monitoring (routine and thematic) of third party activities that impact on customers and regulatory obligations
- Enhanced mechanisms for training provision of appropriate information for third parties (product and operational information)
- Defined and workable arrangements for ceasing a relationship with a third party

Introduced business is absolutely key to any growing mortgage brokerage firm, however the compliance aspect of any arrangement needs to be adhered to along with the rules around GDPR and KYC.

Lastly, we have also started to offer 'Refer a Friend' revenue streams to clients through our TrackerHUB portal and if the client sends more than two referrals within any one quarter we are signing them up as official introducers. This means we have a full understanding of exactly where our business is generated from which our network has confirmed is absolutely key moving forward in 2019 and beyond.

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