FSA regulations stipulate that a broker calling themselves independent must offer clients a whole of market product range and the option to pay a fee for the service provided.
Where the client opts to pay a fee the gross procuration fee payable from the lender to the network has to be rebated to the client.
Genesis says most networks assumed that any fee rebate would relate only to the net fee received by the AR from the network, which is not the case.
Frank Thurlby, head of compliance at Genesis, says: “Although this issue looks like an easy one to resolve it does create a number of complex compliance issues for networks. Genesis has devised a solution to the problem that means our ARs can describe themselves as independent if they wish to do so.”
Genesis has developed an accounting process supported by a compliance audit trail which enables ARs to fully rebate fees to their clients whilst at the same time allowing Genesis to charge ARs for the compliance services it provides.
It says is not clear if any other networks have yet developed a workable solution to this problem.
Sally Laker, managing director at Mortgage Intelligence, says: “At Mortgage Intelligence we are happy for brokers to call themselves independent, but they have to be able to offer clients that choice. I think other networks will follow.”
And Steven Atkins, group compliance director at Freedom, says: “This is a good idea. I am surprised that more ARs have not gone down the independent route.”