To start a mortgage brokerage in the UK you either join a network or principal as an appointed representative, or apply to the FCA for your own permission to advise on and arrange regulated mortgage contracts. A directly authorised broker that does not hold client money needs capital of at least £5,000 or 2.5% of annual income, PII of at least EUR 460,000 per claim and EUR 750,000 in aggregate, qualified advisers and approved senior managers. Most mortgage broker applications fall into FCA fee Category 4, which is £2,820, and the FCA has up to 6 months to decide a complete application.
This guide covers the directly authorised route: the permissions to apply for, the prudential rules in MIPRU as they stand on 15 November 2026, people and qualifications, the application file and the rules that apply from day one.
Network or directly authorised
Most new brokers start under a network or mortgage principal as an appointed representative. The principal holds the permission, the PII and the capital, and provides compliance monitoring and file checks, in return for a share of procuration fees and client fees. A directly authorised firm pays its own way and chooses its own lenders, protection insurers and processes.
The usual reasons to go direct are scale, control of the proposition, and the cost of the network's share once income grows. Our comparison of directly authorised and appointed representative status works through the numbers.
Which permissions a mortgage broker needs
| Permission | What it covers | Notes |
|---|---|---|
| Advising on regulated mortgage contracts | Recommendations on residential mortgages, remortgages and second charge mortgages | Second charge mortgages have been regulated as mortgages since 21 March 2016 |
| Arranging (bringing about) regulated mortgage contracts | Taking the steps that bring about the mortgage | Usually applied for with advising |
| Making arrangements with a view to regulated mortgage contracts | Introducing and submitting applications to lenders | Usually applied for with advising |
| Equivalent permissions for home reversion, home purchase and sale and rent back plans | Equity release and Islamic home finance products | Only if the business plan includes them |
| Insurance distribution | Protection and general insurance, such as life cover, income protection and buildings insurance | Most brokers add these, which brings the insurance PII limits into play |
| Credit broking | Introducing customers to unsecured or other credit | Only if the plan includes it |
Lifetime mortgages are regulated mortgage contracts, but advising on them needs advisers with an additional equity release qualification. Consumer buy-to-let has its own regime under the Mortgage Credit Directive Order 2015, separate from regulated mortgage permissions.
Capital: MIPRU 4.2
A firm that only carries on home finance mediation and insurance distribution has a capital resources requirement under MIPRU 4.2.11R.
| Firm | Capital resources requirement |
|---|---|
| Does not hold client money or other client assets | Higher of £5,000 and 2.5% of annual income from these activities |
| Holds client money or other client assets | Higher of £10,000 and 5% of annual income from these activities |
Most brokers apply with a requirement not to hold client money. Fees are paid to the firm, and procuration fees come from lenders. A firm that also gives investment advice is a personal investment firm and follows IPRU(INV) 13 instead, with a £20,000 floor.
PII: the limits depend on what you broker
MIPRU 3.2 sets the minimum limits of indemnity. Which limit applies depends on the firm's activities, and a firm that does both mortgages and insurance needs a policy that meets both sets of limits.
| Firm | Single claim | Aggregate |
|---|---|---|
| Mortgage adviser or arranger under the Mortgage Credit Directive (most first and second charge brokers) | EUR 460,000 | EUR 750,000 per calendar year |
| Other home finance intermediaries | Higher of £100,000 and 10% of annual income, up to £1 million | Higher of £500,000 and 10% of annual income, up to £1 million |
| Also an insurance intermediary (protection or general insurance) | EUR 1,300,380 | Higher of EUR 1,924,560 and 10% of annual income, up to £30 million |
The excess must not exceed the higher of £2,500 and 1.5% of annual income for a firm that does not hold client money (MIPRU 3.2.11R), or the higher of £5,000 and 3% for a firm that does (MIPRU 3.2.12R). A higher excess needs additional capital. The policy must cover the firm's employees and any appointed representatives, give continuous cover from the date of permission, and cover Ombudsman awards. Our PII requirements guide has the full tables.
People: qualifications, SM&CR and competence
Mortgage advisers must hold an appropriate qualification from the FCA's list in the Training and Competence sourcebook, such as CeMAP or CertMAP. Advisers on equity release need the additional equity release qualification. The firm must assess each adviser as competent before they advise without supervision, and keep that assessment up to date.
The firm is an SM&CR firm. A small brokerage is usually a core firm, with senior managers such as SMF3 (executive director) or SMF1 (chief executive), SMF16 (compliance oversight) and SMF17 (money laundering reporting officer), each needing FCA approval. Advisers are certified by the firm every year. Our SM&CR service covers the documents the FCA expects.
The application file
| Document | What the FCA looks for |
|---|---|
| Regulatory business plan | Target customers, product range (residential, buy-to-let, second charge, later life), lender access, fee model, protection and general insurance offer |
| Financial projections | Three years of forecasts with headroom over the MIPRU capital requirement, including a stressed case |
| Wind-down plan | How the firm would close and transfer customers in an orderly way |
| Advice process | Fact find, affordability, product research, suitability and file checking, mapped to MCOB |
| Consumer Duty evidence | Target market, fair value of broker fees, vulnerable customers, outcome monitoring |
| PII | Policy or firm quote meeting MIPRU 3.2 |
| People | SMF applications, controllers, competence scheme, organisation chart |
| Financial crime | AML risk assessment, customer due diligence, mortgage fraud controls |
Lender access is part of the business model. Many directly authorised brokers reach lenders through mortgage clubs or packagers rather than direct agencies, and the business plan should explain the route.
Timescales and fees
Most mortgage broker applications are Category 4, a fee of £2,820, paid through Connect and non-refundable. The FCA must decide a complete application within 6 months and any application within 12 months. The Government confirmed on 12 May 2026 that it will cut these to 4 and 10 months through the Financial Services and Markets Bill, which is not yet in force. Once authorised, the firm pays annual FCA fees and levies for the Financial Ombudsman Service and the Financial Services Compensation Scheme.
The rules that apply from day one
- MCOB: advice standards, affordability, product disclosure and fee disclosure. Our guide to MCOB advice and suitability covers the detail.
- The Consumer Duty, including fair value of broker fees and outcome monitoring. See Consumer Duty for mortgage brokers.
- Financial promotions rules for adverts, websites and social media.
- Complaints handling under DISP, with access to the Financial Ombudsman Service.
- Retail Mediation Activities Return (RMAR) reporting, including capital and PII.
The mortgage rules are also changing. The FCA's CP26/18 mortgage rule review proposes changes to advice and distribution rules that a new firm should design for now.
How Regulatory Counsel helps
We prepare mortgage broker applications end to end: permissions, business plan, projections, advice process, Consumer Duty evidence and SM&CR documents, and we manage the FCA's questions to a decision. See our mortgages and home finance sector page and our licensing and authorisation service.