Mortgage brokers are FCA-regulated, and that changes the insurance conversation entirely: professional indemnity isn't advisable, it's a condition of authorisation, with minimum limits written into the FCA Handbook (MIPRU 3). This guide explains the requirements, the market, and how brokers – of mortgages – should buy from brokers of insurance.
What insurance does a mortgage broker need?
Professional indemnity – FCA-mandated. Firms carrying on home finance mediation must hold PII meeting MIPRU 3's minimums. The limits are prescribed (denominated in euros, with income-linked aggregates): for home finance intermediaries the minimum is calculated against set per-claim/aggregate figures and 10% of annual income (capped), and firms doing insurance distribution alongside mortgages must meet the higher of the applicable limits – the insurance-distribution figures being €1,300,380 per claim and the higher of €1,924,560 or 10% of annual income in aggregate. Excess limits are also regulated: no more than £2,500 or 1.5% of annual income (doubled if you hold client money), or you must hold additional capital. Cover must be continuous since authorisation – a gap is a regulatory breach, not just a risk.
Appointed Representative structures. Principal firms must hold compliant PII covering current and former ARs. If you're an AR, confirm precisely what your principal's policy covers and what remains yours.
Also: cyber (client financial data plus payment-diversion fraud exposure), office cover, D&O for directors of authorised firms, and – critically – run-off on exit: PII is claims-made, regulators and networks typically expect six years, and mis-selling claims mature slowly.
How much does it cost?
FCA-regulated PII is individually rated on income, product mix (equity release, later-life lending and second charges rate harder than mainstream residential), advice model, and complaints history. Small directly-authorised firms typically pay from the high hundreds into four figures annually; minimum premiums apply. The market hardened badly in recent memory and pricing remains sensitive to claims trends – early renewal and clean file presentation matter.
Comparison of providers
This is a specialist-broker market:
| Provider | Type | Notable features |
|---|---|---|
| Howden | Specialist broker | Acts for around 40% of UK IFA firms; places £160m+ of PI premium annually; deep FCA-market access; explicit mortgage-broker proposition |
| Lockton | Global broker | Strong MIPRU-compliance expertise; publishes clear guidance on the FCA minimums |
| Specialist FS-PI brokers | Brokers | For networks, ARs and firms with complaints history |
| Networks' arranged cover | Via principal | ARs: often bundled – verify scope and your residual exposure |
Direct online PI products generally don't write FCA home-finance mediation risks; don't waste the renewal window trying.
Reviews and expert ratings
Broker-placed: consumer scores don't discriminate. Which?/Fairer Finance: not rated. Quality gates: MIPRU-compliant limits and excess, continuity of cover, and AR wording precision.
Key takeaway
Compliance is the floor: MIPRU limits, regulated excess, unbroken cover since authorisation. Above the floor, buy against your product mix – later-life and equity-release work needs limits and wordings mainstream books don't – and treat run-off as part of your exit plan's cost base. Use a financial-services PI specialist; this is not a generalist's market.
Sources
- handbook.fca.org.uk/handbook/MIPRU/3/ (PII requirements)
- fca.org.uk/firms/professional-indemnity-insurance (incl. AR obligations)
- lockton.com (MIPRU minimums: €1,300,380 / €1,924,560 / excess rules)
- howdengroup.com (market share and proposition)