Tracking Mortgage Introducers and Referral Fees

If you take work from estate agents, solicitors or accountants, you may have agreed to pay some of them. The deal is easy to make and easy to forget. Six months on, nobody is sure which fee was agreed, which cases earned it, or whether it was paid.

This post covers the money side of introducers: what to agree, what to record, how a fee moves from owed to paid, and the FCA rule that limits how you can pay it. If you are still building the network, how to build a referral partner network covers the relationship side.

Why informal tracking fails

A note in a spreadsheet works for two introducers. It breaks when:

• an introducer asks what they are owed and you rebuild the answer from cases
• one bank payment covers several cases and you cannot say which
• a percentage fee depends on a proc fee that has not arrived yet
• someone changes the agreed rate and the old cases quietly change with it
• a fee is disputed by phone and nothing is written down

None of these is a compliance failure on its own. Together they leave you unable to show what you paid, to whom and why. The sections below follow a fee in the order things happen.

What to agree before the first case

Write the terms down before the first referral, and keep one active set per introducer. At minimum:

Term	What to settle
Basis	A fixed fee per case, or a percentage of the proc fee
Trigger	What counts as earned: usually the case completing
Amount used	For a percentage, which figure it applies to, such as the net proc fee
When it is paid	A date or period after the money reaches you
What happens on a clawback	Whether a fee is returned if the lender takes back the proc fee
Who it covers	The firm or an individual, and who may submit leads

If an introducer does more than pass on a name, ask your compliance adviser whether they need to be authorised. How an introducer fee is treated for VAT and tax is a question for your accountant.

A percentage of the proc fee is the awkward one. The proc fee is not final until the lender has paid it, so the fee you owe is not final either. Decide in advance whether you work from the written figure or the banked figure. Working from the banked figure is simpler, because you never have to correct it.

The rule that limits the shape of the fee

MCOB 2.3.2R requires a firm to take reasonable steps to make sure it does not offer, give, solicit or accept an inducement where that is likely to conflict to a material extent with a duty owed to customers. The FCA describes an inducement as a benefit offered to bring about a particular course of action (MCOB 2.3.3G).

One structure is ruled out by name. MCOB 2.3.6R says a firm must not operate a system of giving or offering inducements to a mortgage intermediary or other third party where the value rises if they exceed a target for business referred. It also says a firm must not solicit or accept an inducement that rises when the firm itself exceeds a target.

In practice that means:

• a flat fee per case is not caught by this rule
• a percentage of the same fee, applied the same way to every case, is not caught either
• a fee that steps up after the tenth, twentieth or fiftieth referral is caught

If you are about to write a bonus into an introducer agreement, check it against MCOB 2.3.6R first. The guidance also lets a firm give or receive minor indirect benefits, such as gifts and hospitality, as long as they are unlikely to conflict with duties to customers (MCOB 2.3.5G). A cash fee per case is not a gift or hospitality, so that allowance does not cover it. A fee that clears MCOB 2.3.6R still has to pass the conflict test in MCOB 2.3.2R.

What you have to tell the client, and what the rules leave open

The disclosure rules we checked are about your own fees and income. They require you to tell the client:

• the fees you will charge them (MCOB 4.4A.8R(1)(a))
• whether you will receive commission from the lender or another third party, and whether it will be offset against your fees (MCOB 4.4A.8R(1)(c))
• for MCD contracts, the amount of commissions or other inducements, or that the actual amount will follow later (MCOB 4.4A.8R(1)(d))

On the illustration, an intermediary has to show the amount the lender pays the intermediary or third parties, with their names (MCOB 5.6.113R).

None of this says, in terms, that you must disclose what you pay an introducer. But MCOB 4.4A.8R(1)(d) refers to commissions or other inducements without saying whose, and nothing we read defines the phrase. Treat that as open, not as permission. Ask your compliance adviser or network whether your own arrangements need to be disclosed, and write the answer down as a policy you apply consistently.

From owed to paid: the lifecycle of a fee

When an introduced case completes, one fee is owed under the terms in force at the time. That fee moves through a small set of states:

State	What it means	What to record
Accrued	The case has completed and the fee is owed	The amount, the terms used and the date
Waiting on a proc fee	A percentage fee whose proc fee has not been banked yet	No amount yet: it is filled in once the proc fee is banked
Paid	You have paid the introducer	The date and a payment reference
Disputed	You and the introducer disagree about the amount or whether it is due	The reason, in writing
Waived	You and the introducer agree it will not be paid	The reason, in writing

Three habits keep this clean:

1. Freeze the terms on each case. If you renegotiate an introducer's rate, the new rate applies to new cases. Earlier fees stay at the rate that was agreed when they were earned.
2. Pay in batches and put the reference in one place. An introducer firm is usually paid in one bank transfer that settles several cases, so record the same reference against every case the transfer covers.
3. Do not leave a dispute as a phone call. Write down what was disputed and why, and how it ended.

Reconciling once a month

Each month, take the introducers you have paid or owe, and check three things:

1. Every case they introduced that completed has a fee record, or a reason it does not
2. Every percentage fee is either resolved against a banked proc fee or waiting for one
3. Every paid fee has a date and a reference that matches your bank statement

The first check is the one that catches missed fees. If a case completed and the introducer's terms were active, a fee should exist. If none does, you have either a gap in the record or a case that was assigned to the wrong introducer.

Spreadsheet or system

	Spreadsheet	A case system
Linking a fee to the case	You copy the case number across by hand	The fee belongs to the case
Frozen terms	You have to remember not to overwrite the old rate	The terms are stored on each fee
Percentage fees	You recalculate when the proc fee lands	The amount fills in when the proc fee is banked
Disputes and waivers	A note in a cell, if anyone writes one	A required reason on the record
What the introducer sees	Nothing unless you send it	Their own referrals and fees, if you give them access
Audit	Version history, if you keep it	Saving terms, marking fees paid, disputing and waiving are recorded in the audit log

A spreadsheet is fine for a handful of introducers with fixed fees. It stops being fine when you add percentage fees, several introducers, or a second person who pays them.

What Cleera records

Cleera's introducer features are on the Firm plan, and only organisation admins can set fee terms and manage fees.

What Cleera does	Where
Holds one fee arrangement per introducer: a fixed amount per case, or a percentage of the net proc fee	The introducer's fee arrangement in the introducers area
Creates a fee record when a case completes, if that introducer has an active arrangement	Fee accruals
Waits for the proc fee to be banked before it fills in a percentage fee	Fee accruals
Keeps the terms used on each fee, so changing an arrangement later does not change earlier fees	Each fee record
Marks fees paid, including several at once under one payment reference	Fee accruals
Requires a written reason to dispute or waive a fee	Each fee record
Filters fees by status	Fee accruals
Records saving fee terms, marking fees paid, disputing and waiving in the audit log	Audit log
Keeps the fee record and its case number if the case is later anonymised	Fee accruals
Shows each introducer their own referrals and the fees earned on them, through their own login	The introducer portal
Shows each introducer's conversion rate, net proc fee earned and average days to completion	Insights, with the money figures visible to the account owner only

An introducer sees a fee against a referral once it is accrued or paid. They do not see one that is disputed, waived or still waiting on a proc fee.

Fees are a fixed amount or a percentage of the net proc fee, the same on every case. Staying inside MCOB 2.3.6R is still your responsibility, because an arrangement can be edited at any time.

What you get is the list of what is owed, to whom and why, so you are not rebuilding it from cases each time you pay.

The mortgage CRM page shows the case view and Features lists the introducer portal. For how the portal works in practice, see the case study on managing several introducers on one platform. For the proc fee side, see tracking commission and proc fees.

Key takeaways

• Agree and write down each introducer's terms before the first case, with one active set per introducer.
• Pay a flat fee, or the same percentage every time. A fee that rises after a volume target is prohibited by MCOB 2.3.6R.
• Fix the terms on each case when it completes, so a later renegotiation does not rewrite history.
• Record a payment reference on every paid fee, and a written reason on every dispute or waiver.
• Reconcile monthly, starting with completed cases that have no fee record.
• The disclosure rules we checked do not say in terms that you must disclose what you pay an introducer, and MCOB 4.4A.8R(1)(d) does not say whose inducements it covers. Treat it as open and settle your policy with your compliance adviser or network.

Sources

• FCA Handbook, MCOB 2.3: inducements
• FCA Handbook, MCOB 4.4A
• FCA Handbook, MCOB 5.6: content of the illustration
• FCA, appointed representatives: principals