How to Create a Compliant Terms of Business (CIDD) for Mortgage & Protection Brokers

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Your Terms of Business (often referred to as a Client Initial Disclosure Document or CIDD) is one of the first regulatory documents your client receives. It sets out who you are, what services you provide, how you are paid, and what clients can expect from your firm.

A compliant Terms of Business should be clear, accurate and easy for clients to understand. It should not simply be a generic FCA template—it should reflect how your business actually operates.

In this guide, we explain:

  • The essential information your Terms of Business must include.
  • How to structure the document clearly.
  • Common mistakes brokers should avoid.
  • Additional information that demonstrates good practice and supports Consumer Duty.

1. Start With Your Firm Details

The first section should clearly identify your business. Include:

  • Your legal firm name.
  • Trading name (if different).
  • Registered address.
  • Contact details.
  • FCA Firm Reference Number (FRN).
  • Company registration details (if applicable).

Example:

ABC Mortgage Solutions Ltd is authorised and regulated by the Financial Conduct Authority. Our FCA Firm Reference Number is XXXXXXX.

2. Explain Your Regulatory Status

Your client must understand what type of regulated services you provide and any limitations.

Clearly state whether you provide:

  • Mortgage advice.
  • Mortgage arranging.
  • Non-investment insurance advice.
  • Non-investment insurance arranging.

Avoid vague wording. Clients should be able to understand exactly what your firm is authorised to do.

3. Explain the Scope of Your Service

Clearly explain how you provide advice, confirm whether you are:

  • Independent and able to consider the whole of the market.
  • Restricted to a panel.
  • Offering advice from a limited range of products.

4. Explain Your Fees and Charges

Your fee disclosure must be clear and transparent. Include:

  • Whether you charge a fee.
  • The amount of the fee.
  • When payment is due.
  • Whether the fee is refundable.
  • Any circumstances where additional charges may apply.

Avoid unclear wording such as:

“A fee may apply.”

Instead explain exactly what the client can expect.

Example:

Our mortgage advice fee is £495. This becomes payable on completion of your mortgage.

If your fees vary, explain how they are calculated.

5. Explain Commission Arrangements

Clients should understand that you may receive commission. Include:

  • That lenders or insurers may pay commission.
  • That commission does not affect the suitability of your recommendation.
  • Any other relevant remuneration arrangements.

Transparency around remuneration supports Consumer Duty expectations.

6. Include Your Complaints Procedure

Your Terms of Business should explain how clients can complain. Include:

  • Who complaints should be sent to.
  • How complaints will be handled.
  • Expected response times.
  • Details of the Financial Ombudsman Service.

Make this section easy to find and easy to understand.

7. Include Financial Services Compensation Scheme Information

Explain the protection available through the Financial Services Compensation Scheme (FSCS).

Keep the wording clear and avoid unnecessary technical explanations.

8. Include Data Protection Information

Explain how you handle client information. Include:

  • How personal data is used.
  • Reference to your Privacy Notice.
  • How clients can request further information.

Your Terms of Business does not need to duplicate your full Privacy Policy, but it should explain the key points.

9. Explain Client Responsibilities

A good Terms of Business should explain that clients also have responsibilities.

Include expectations such as:

Clients should:

  • Provide accurate information.
  • Tell you about changes in circumstances.
  • Read documents carefully.
  • Ask questions if anything is unclear.

This helps manage expectations and supports a transparent advice process.

10. Add Good Practice Sections

The following sections are not mandatory but demonstrate a strong customer-focused approach.

Your Advice Process

Explain what clients can expect.

For example:

  1. Initial discussion.
  2. Fact finding.
  3. Research.
  4. Recommendation.
  5. Application support.
  6. Completion and ongoing support.

Supporting Vulnerable Customers

Explain that your firm recognises customers may need additional support.

Example:

If you have any circumstances that may affect how we provide our service, please let us know so we can make appropriate adjustments.

Consumer Duty Commitment

Consider including a short statement confirming your commitment to delivering good customer outcomes.

Example:

We are committed to providing clear information, suitable recommendations and support throughout your mortgage journey.

Recommended Terms of Business Layout

A simple structure could be:

  1. Welcome and introduction.
  2. About our firm.
  3. FCA authorisation and regulatory status.
  4. Services we provide.
  5. How we provide advice.
  6. Fees and commission.
  7. Client responsibilities.
  8. Complaints procedure.
  9. Financial Services Compensation Scheme.
  10. Data protection.
  11. Vulnerable customer support.
  12. Contact details.

Common Mistakes to Avoid

Before issuing your Terms of Business, check that you have avoided:

❌ Using an outdated template.
❌ Incorrect FCA details.
❌ Fees that are unclear or misleading.
❌ Describing services you do not actually provide.
❌ Missing complaints information.
❌ Overloading clients with unnecessary regulatory wording.
❌ Failing to update the document when your business changes.

Final Checklist

Before using your Terms of Business, confirm:

✔ It reflects your current FCA permissions.
✔ Your fees are clearly explained.
✔ Your service scope is accurate.
✔ Commission arrangements are transparent.
✔ Complaints information is included.
✔ Data protection responsibilities are covered.
✔ Clients can easily understand the document.
✔ The document supports your Consumer Duty obligations.

Final Thoughts

A good Terms of Business document should do more than meet FCA requirements. It should give clients confidence, clearly explain your service and set the foundation for a professional relationship.

The best documents are not the longest—they are the ones that accurately reflect your business, communicate clearly with clients and demonstrate that your firm is committed to delivering good outcomes.