BridgingSecond Charge

FCA clarifies “independent” and referred advice

The Financial Conduct Authority has confirmed that brokers who advise clients to take a second charge but rely on a master broker for the information can still call themselves independent.

Speaking to brokers at the Leeds Mortgage Business Expo Lynda Blackwell, mortgage sector manager at the Financial Conduct Authority, said: “Can you keep the ‘independent’ term by giving full advice and recommendations on seconds using master brokers for the information, someone who doesn’t have any liability for the information they give you?

“The answer to that is yes, you can. You can choose to use a third party to help you fulfil your responsibilities.

“The important thing to remember is that while you can outsource the work, you cannot outsource the regulatory responsibility – it’s you who is responsible for the advice given and on the hook for that advice so far as we are concerned.”

She added that it was those giving the advice who held the responsibility to ensure the master broker or distributor used to source the product and information on second charges was “suitably experienced” and said the FCA would expect advisers to be able to demonstrate due diligence carried out on business partners.

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