Following the financial crisis in 2008, the Financial Services Authority (FSA) was replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in 2013.
As part of this reform, the FCA took on the primary regulator role for mortgage broker firms with stricter reporting requirements to ensure that brokers operate within set guidelines to promote transparency, fairness, and compliance in the financial services sector.
These guidelines keep evolving. The Mortgage Conduct of Business (MCOB) rules were introduced in 2004, the Mortgage Market Review (MMR) was implemented in 2014, then came the Senior Managers and Certification Regime (SM&CR) in 2019 for all solo regulated firms, while the Consumer Duty requirements came into effect in 2023.
As part of these efforts, a comprehensive bi-annual FCA report is a regulatory requirement for mortgage brokers in the UK. It has to be submitted once after the firm’s business year ends and again after 6 months.
Preparing and submitting this report can be a time-consuming and complex task, which requires attention to detail and a thorough understanding of the regulatory expectations.
This is where a UK mortgage CRM software comes into play, offering support to mortgage brokers with the reporting process to cut down admin time and to simplify the process.
What is the bi-annual FCA report?
This report requires mortgage brokers, insurance brokers and IFAs to submit detailed information about their business results in relation to the previous six months or 12 months as applicable.
The required data includes the number and type of transactions, customer complaints, professional indemnity insurance details, organisation structure and changes, accounting information, projections, fee payment obligations, etc.
Through the report, the FCA aims to understand how the industry is doing in terms of their business volumes and structure, as well as whether brokers are upholding the Treating Customers Fairly (TCF) principles by maintaining appropriate insurance and keeping complaints at a low level.
The challenge with this report
For many mortgage brokers, compiling the necessary information for the FCA report can be a challenge for various reasons:
- Data collection: brokers need to gather data from various sources like client files, transaction records, insurance paperwork and company accounts.
- Accuracy: they need to ensure that all the information is correct and up-to-date to avoid mistakes that could lead to compliance issues or paying incorrect regulatory fees.
- Time: the process of preparing and submitting the report can be time-consuming, which can interfere with completing the day-to-day tasks. In addition, the reporting system shuts down for the evening, so the report can only be done during working hours.
- Penalties: mistakes or missing information could result in penalties and/or increased scrutiny from the FCA, which could be a further distraction from the normal business operations.
How a CRM software can help
As an example, the ClientTree CRM system was specifically designed to support UK mortgage brokers during their day-to-day operations while also ensuring compliance with regulatory requirements.
Here’s how a CRM software can assist with the bi-annual FCA report:
- Centralised data: the CRM software is a hub for all client information, transaction records and documents. This makes it easy for brokers to access the data they need for the FCA report, without having to search through multiple systems or files.
- Automated FCA reporting tool: one of the key features is the FCA report generation tool, where a broker only has to input the reporting period dates to get the required output. This automation can save hours, if not days, for brokers on each occasion.
- Compliance: A CRM system includes various compliance features, for example, recording meeting a client face-to-face, any vulnerabilities, case research notes and documents, the rationale behind the advice given as well as any disclosures made. These details demonstrate the broker’s commitment to regulatory compliance.
- Audit trail: In case of an FCA audit or review, having a clear audit trail is important. Brokers can record a complete history of all interactions and transactions on the platform, which can be reviewed at any time. This audit trail not only supports the FCA report, but also helps brokers respond quickly and confidently to any regulatory or lender compliance enquiries.
What other records and documents are required?
In order to complete the FCA reports, brokers also need to ensure that they have the following in place:
- Company accounts: as the reporting deadline is 6 weeks after each 6-month period ends, brokers and their accountants need to be working closely to ensure that the turnover, profit and various other figures are available promptly;
- Professional Indemnity Insurance (PII): this particular insurance has to be renewed on an annual basis, so the details are only reported once a year. Still, the broker firm needs to have the details to hand;
- Complaints information: whilst all brokers aim to provide good customer service to avoid complaints, sometime it may happen. A complaints register has to be maintained about the time and the details of each complaint as well as their outcome;
- HR records: the FCA reports ask firms to confirm their advisor numbers including joiners and leavers during the subject period as well as qualifications. This requires up-to-date HR information, which is normally easy for small firms, but perhaps less straightforward for bigger organisations.
The above summary illustrates the point why the bi-annual FCA report is a complex task and why the CRM’s ability to pull together some of the information is important for broker firms.
Conclusion
By using the available features of a UK mortgage CRM software, brokers can cut down the time it takes to prepare the bi-annual FCA reports, ensure data accuracy and compliance.
This, in turn, reduces the administrative burden, improves efficiency and frees up time for advising clients.
Therefore, we can conclude that in the highly regulated financial services industry, having a reliable UK mortgage CRM software like ClientTree is invaluable for staying compliant and focused on delivering excellent client service.
