Most of you will have dealings with third party firms or individuals who refer or introduce potential customers to you to take advantage of your service. Often these relationships are based on a previous association and a good knowledge of the firm or individual, so the arrangements are founded on trust and professionalism.
Introducers can represent a valuable adjunct to your business and can make such a difference to the flow of new enquiries, but it is important to recognise that the regulatory responsibility for the introduction and the potential consequences for commission clawback and, in worst case scenarios, fraud will lie with you and your firm.
Indeed, I have seen first-hand the consequences of firms accepting business from unscrupulous introducers and it is not good. I have observed situations where a third party introducer has been offered a 50% split of commission for protection leads which has resulted in a healthy uptake of policies from referred customers, only for it to turn out to be a scam – the introducer ‘runs’ with their share of money and the policies premiums dry up after a month or two, leaving the AR firm with a huge loss as a result of significant clawbacks. I have also witnessed firms lose their lender panel appointments as a result of transacting fraudulent cases where, after further investigation, the introducer was found to be co-ordinating the creation of false payslips and manufacturing salary credits into bank accounts.
Regulatory responsibility, as ever, ultimately lies with The Right Mortgage. It is therefore very important, for a number of reasons for us, to have a robust system to check out and register all business introducers. For this reason we are upgrading our Introducer process by replacing the Statement of Honesty declaration with a full introducer application form.
The purpose of the application form is for the network to collect more details about prospective introducers to enable us to conduct due diligence on the firm or individual. This is particularly important for new introducers with whom you have had little or no previous dealings and you want reassurance that their intentions are genuine.
With immediate effect, for any new introducer, the following process should be followed:
- Download the appropriate introducer application form. There are two versions, one for a formed business that will be introducing to you and the other is where the introducer is an individual making referrals outside of a firm.
- Download the Introducer Agreement.
- Ask the introducer to complete the application form fully and to complete and sign the Agreement.
- Submit the application and agreement to admin@therightmortgage.co.uk for validation
Once the application and agreement are received we will undertake some checks on the firm/individual. In particular we will be looking for any previous regulatory associations and therefore the possibility the firm or individual has any FCA or lender suspensions or if there are any other indicators that might suggest potential problems.
In particular we will be looking out for ex-brokers who may have previously lost their license to trade. Such individuals will be classed as high risk due to their knowledge of the processes and the increased potential for them to support fraudulent applications.
Other indicators that would suggest a higher risk would be new introducers that have approached you out of the blue and who you have no previous knowledge of or where the introducer is a large distance away from your premises.
The application process is designed to help you stay safe in your business by enabling further checks to be carried out on your behalf, but the best way to manage new introducers is to use your instinct. Often, if the proposition has been too easy to agree or seems too good to be true, then you should be extra cautious.
If you have any queries, or worries about any existing introducers then please speak to your compliance manager.
Consumer Vulnerability Policy
The FCA’s Occasional Paper on Consumer Vulnerability, launched in 2015, was the first step in a conversation with firms to determine how the regulator and industry can work together to address issues around vulnerability. The UK’s aging population, as well as changing trends in public health and society, means that developing more inclusive policies will become increasingly important.
Martin Wheatley, then chief executive of the FCA, said: “We all know somebody in a vulnerable situation and we can expect the number of people who find themselves in those circumstances to grow over the coming years. We all need to start thinking about what the solutions to these challenges will be. Whether it is accessing funds or securing a repayment holiday, we will work collaboratively with firms to identify what inclusive policies could look like and how best we can create the right outcomes for those consumers. It’s a challenge for regulators and firms alike.”
The FCA carried out some research in this area and found some common issues, which revealed:
- Most problems relate to poor interaction or systems
- Some consumers are overwhelmed by complex information and find it hard to distinguish between marketing and important product messages
- In some firms there is inaccurate or overzealous approach to the rules, such as those around data protection or affordability, preventing firms meeting the needs of vulnerable consumers.
The FCA’s analysis also shows that it is not just those people who experience sudden life-changing events that firms should consider when developing vulnerability strategies:
- One in seven adults has the literacy skills of a child aged 11 or below (Department for Business, Innovation and Skills)
- 1m UK adults have never used the internet, over half have a disability (Department for Business, Innovation and Skills)
- 800,000 people in the UK are now living with dementia, this is expected to double over the next 40 years (Age UK)
- The number of people aged over 85 is predicted to double in the next 20 years (Age UK)
As a network, responsible for thousands of customer interactions each month, we feel it is important to have a policy that sets out our own expectations on consumer vulnerability issues. In this bulletin we are presenting this policy and would ask that you take the time to understand the issues and the risks, how to identify vulnerable customers and the special measures you should take to support those customers in greater need.
