What It Actually Costs to Run a Directly Authorised Mortgage Firm in 2026

For most of a career, an adviser working as an appointed representative never personally signs a software contract, a PI policy, or an invoice from a compliance consultant. The network does that. The moment you go directly authorised, all of it lands on your desk at once, and most of it has to be paid for before you have written a single case under your own permissions.

Directly authorised vs appointed representative covers the strategic side of that decision: control, lender access, compliance ownership, what happens to your client bank. This article is the part that comes after you have made the call in principle and need to know what you are actually about to spend. These are the real, current UK figures, with sources, for an adviser sizing up the move in 2026.

The honest summary, before the detail

For a lean, one-adviser DA firm with a clean compliance record and a modest case load, a realistic ongoing cost picture looks like this.

| Cost | Typical annual figure | Type | |---|---|---| | FCA application fee | £2,790 | One-off, year one only | | FCA periodic (annual) fee | From ~£2,200 minimum | Recurring, scales with income | | Professional indemnity insurance | From ~£840 | Recurring | | Compliance support | ~£5,300–£16,100 | Recurring | | Software stack (CRM, sourcing, AML/ID, e-signature) | ~£1,800–£4,800 | Recurring | | ICO data protection fee | £52 | Recurring | | FOS case fees | £680 per case, only above your allowance | Variable, usage-driven | | FSCS levy | Variable, sector total £4m for 2026/27 | Variable, not charged every year |

Add it up and a sensible working budget for ongoing costs is roughly £10,000 to £24,000 a year, before any FOS case fees or an FSCS levy year, plus the £2,790 application fee in year one. The range is wide because compliance support and software spend are choices, not fixed obligations. Everything else below explains where each figure comes from and why it moves.

The FCA: application fee and annual periodic fee

Two separate FCA costs apply, and advisers researching this often conflate them.

The application fee is a one-off payment to apply for Part 4A authorisation. The FCA groups applications into ten pricing categories, and its own fee page is explicit that "most financial advisers, mortgage brokers and general insurance intermediary applications fall into Category 4," which carries a fee of £2,790. The same page lists fee-block A.18, the block mortgage advisers sit in, directly under Category 4. This is paid through the FCA's Connect portal when you submit your application, it is non-refundable, and it has no relationship to your firm's size or income. Every Category 4 applicant pays the same amount.

The periodic fee is different: an annual charge, paid for as long as you remain authorised, calculated using a minimum fee plus a variable component tied to your firm's income above a threshold. Mortgage advisers sit in fee-block A.18 ("home finance providers, advisers and arrangers"). The FCA's own CP26/11 consultation paper proposes collecting £23.8m in periodic fees from this fee-block for 2026/27, up 1.2% on the £23.5m collected in 2025/26.

The figure that matters most for a small or sole-adviser firm is the minimum fee, since most lean DA practices will sit close to it rather than paying significantly more. Every firm authorised under an "A" fee-block, including A.18, pays the minimum fee set for fee-block A.0, and the FCA's own consultation paper states it plainly: "Since 2022/23 we have been increasing the A.0 minimum fee in stages. These increases will finish this year, reaching £2,200. From 2027/28 the minimum fee will rise annually" in line with the FCA's running costs. That consultation closed on 30 April 2026, and the FCA's confirmed rates are due in a Policy Statement expected in July 2026, with invoices following from that point. If you are budgeting before that Policy Statement lands, treat £2,200 as the figure to plan around: it comes from the FCA's own proposal, not a third-party estimate, though it is not yet formally confirmed.

In your first year of authorisation, you only pay a proportion of the periodic fee, based on the months remaining in the FCA's fee year (which runs 1 April to 31 March), and the FCA contacts newly authorised firms directly about this.

Professional indemnity insurance

PI insurance is the cost advisers most often underestimate when they are used to a network arranging it for them, partly because network-arranged PI is typically cheaper than what you can get on your own, and partly because the regulatory minimum and the real-world premium are two different numbers.

The regulatory floor sits in the FCA Handbook at MIPRU 3.2, which requires a mortgage intermediary to hold cover of at least the higher of two figures: a fixed minimum amount, and 10% of your annual income from relevant business, subject to a cap. In practice this regulatory floor is rarely the number that determines what you pay. Lenders, packagers, and mortgage clubs frequently require materially more cover than the legal minimum as a condition of panel access, and your actual premium is driven far more by your claims history, case mix, and the limit of cover you choose to buy than by MIPRU's floor.

On real premiums, one UK insurance broker quotes mortgage broker PI cover starting from around £840 a year for £2m of cover, based on an annual income of up to £80,000. Treat that as an entry point rather than a typical figure: premiums rise with income, case mix, claims history, and the limit of cover you choose, and quotes for the same firm can vary between insurers, so it is worth comparing more than one before you commit. If your firm carries any history of upheld complaints, handles a high proportion of complex or specialist cases, or wants cover meaningfully above the legal minimum, expect to pay more than this baseline.

FOS and FSCS: the costs you do not fully control

Two further costs sit outside your control in a way the fees above do not, because they depend on industry-wide funding decisions and, in the case of FOS, on whether anyone complains about your firm.

The Financial Ombudsman Service funds itself partly through a general levy charged to all regulated firms and partly through case fees charged when a complaint about your firm is actually referred to it. For 2026/27, the FOS confirmed its standard case fee at £680 per case (via the FOS 2026/2 Fees Manual instrument), up from £650, in line with what it described as a return to inflation-linked increases after a two-year freeze. At the same time, FOS is simplifying how it credits firms for low complaint volumes: rather than a fixed number of free cases, firms now get a free case allowance worth £2,000, used against case fees before the £680-per-case charge kicks in. For a small DA firm that rarely generates upheld complaints, this means many years with no FOS case-fee cost at all. It is not, however, a cost you can plan to zero out entirely, since a single referred complaint can use up your allowance and start generating per-case charges.

The FSCS levy is the one most likely to catch a new DA firm off guard, because it does not appear every year. Mortgage intermediaries were not charged an FSCS levy at all between 2022/23 and 2025/26. That changed for 2026/27: the FSCS confirmed a £4m levy on mortgage intermediaries, the first charge to this group since 2021/22, driven by a lower opening balance for the class and higher-than-forecast compensation costs (forecast at £400,000, mostly relating to legacy PPI-style claims rather than new firm failures). The cost splits 75% to advisers and 25% to home finance providers. Individual firms are charged according to their income tariff, so a smaller firm pays proportionately less of that £4m than a larger one, but the practical lesson is the same for everyone: budget for the possibility of an FSCS charge in any given year, because the amount and even whether it applies at all can change from one fee year to the next.

Compliance support

As an AR, your network's compliance team reviews files, updates your procedures when MCOB or Consumer Duty guidance changes, and handles FCA reporting on your behalf as part of what you are already paying in network fees. As a DA firm, you are buying that function separately, and for almost every one-adviser or small DA practice, that means a monthly retainer with a compliance consultancy rather than an in-house hire.

Pricing varies by provider and by how much hand-holding your firm needs, but one UK compliance consultancy's published retainer structure gives a useful real-world reference point: a Bronze tier around £445 a month (roughly £5,340 a year), a Silver tier around £795 a month (roughly £9,540 a year), and a Gold tier around £1,345 a month (roughly £16,140 a year), with higher tiers adding more proactive monitoring, a fuller library of compliance templates, and more responsive advisory support. For context, the firm marketing those rates positions even its top tier as costing under a fifth of employing a full-time compliance manager, which is roughly consistent with industry expectations for a sole-adviser or small DA practice.

Where you land in that range should reflect genuine risk and complexity, not just price. A firm doing mostly vanilla residential cases needs less hands-on support than one doing a high proportion of specialist, adverse credit, or complex income cases, where the compliance file review burden is heavier and the cost of getting something wrong is higher.

Your software stack

This is the cost category an AR adviser has genuinely never had to think about, because the network's systems came with the job. As a DA firm, you are assembling this yourself, and it falls into a few distinct categories: case management and CRM, a mortgage sourcing system, AML and identity verification checks, and e-signature for client documentation.

Exact costs vary widely by provider, case volume, and how many of these functions are bundled into one platform versus bought separately. As a planning figure, budgeting somewhere in the region of £150 to £400 a month (roughly £1,800 to £4,800 a year) for a lean one-adviser setup covering case management, AML/ID verification, and e-signature is a reasonable starting point, before any per-transaction AML check fees that some providers charge on top of a subscription. Sourcing system access is often included free through your mortgage club membership rather than charged separately, since clubs are typically funded by lenders through proc fee arrangements rather than by charging member firms to join.

The detail of what your record-keeping and audit trail actually needs to support under Consumer Duty is covered in FCA compliance and your CRM: what UK mortgage advisers need to know, which is worth reading alongside this if you have not chosen your stack yet.

The ICO fee: small, but easy to forget

Any DA firm processing client personal data needs to pay the ICO's data protection fee, and most one or two-adviser firms qualify for the lowest tier. Tier 1 applies to organisations with turnover of £632,000 or less, or no more than 10 staff, and costs £52 a year (£47 if you pay by direct debit). It is a small number next to everything above it, but it is a genuine annual obligation that is easy to overlook when budgeting for the bigger-ticket items.

Putting it together

Summing the recurring figures above for a lean one-adviser DA firm, before any FOS case fees or an FSCS levy year, gives a realistic ongoing cost range of roughly £10,000 to £24,000 a year: call it £2,200 in FCA periodic fees, £840 in PI insurance, £52 for the ICO, somewhere between £5,300 and £16,100 for compliance support, and £1,800 to £4,800 for your software stack. Add the £2,790 FCA application fee in year one, and your true first-year cost of going DA sits in the region of £13,000 to £27,000, depending mainly on how much compliance support and software you choose to buy.

Compare that with what AR network fees actually cost: typically £300 to £800 a month, or £3,600 to £9,600 a year, often with a commission split on top. On a pure cash basis, a newer adviser with a smaller book is usually still better off under the bundled AR fee. The economics tend to flip as your income grows, because the DA costs above are largely fixed regardless of how much business you write, while AR commission splits scale up with every case. The crossover point is specific to your own numbers, not a rule of thumb, so it is worth modelling against your actual turnover rather than a generic comparison.

Before you commit

Get a real PI quote before you give notice to your network, not an estimate. Premiums depend on your specific case history and mix, and a quote takes a day or two to arrange. Talk to a compliance consultancy about which tier of support your firm actually needs, since this is the single biggest swing factor in the numbers above. And budget for the variable costs, FOS case fees and the FSCS levy, as contingencies rather than assuming they will be zero every year, because both have moved in the last twelve months in ways that caught parts of the industry off guard.

None of this is a reason to stay AR if DA is the right long-term move for your business. It is simply the real number, so the decision is made on facts rather than on a network's pitch or a compliance consultancy's sales page.

Keeping the back office under control once you have made the move

Whichever route you choose, the administrative load of case management, client communication, and audit-ready documentation does not get lighter once you are trading. For a DA firm in particular, where you are assembling your own software stack from scratch, it is worth choosing case management software once rather than patching together spreadsheets, email, and a portal and migrating later.

Cleera is built for mortgage advisers managing cases, client records, and compliance documentation in one place. If you are pricing up your DA software stack, it is worth seeing what a single, purpose-built system costs against running several separate tools.

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Nothing in this article constitutes regulatory, financial, or legal advice. FCA, FOS, FSCS, and ICO fees are reviewed periodically and the figures here reflect the most recently confirmed or proposed rates as of June 2026. Always check the current figures on the relevant regulator's own fee pages before budgeting, and speak to a qualified compliance professional and insurance broker before making a decision about your regulatory status.