FCA PI requirements for mortgage and home-finance brokers
Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05
Which rules apply to mortgage brokers?
Mortgage and home-finance intermediaries are authorised and supervised by the Financial Conduct Authority (FCA). Two parts of the FCA Handbook do most of the work. Your day-to-day conduct — advice, disclosure and how you treat customers — sits under MCOB (the Mortgage and Home Finance: Conduct of Business sourcebook). Your prudential obligations, including professional indemnity insurance and capital, sit under MIPRU (the Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries).
PI insurance for mortgage firms is governed mainly by MIPRU 3. It is a mandatory condition of doing regulated home-finance business, not an optional extra. Holding adequate financial resources is also one of the FCA's Threshold Conditions — the baseline standards a firm must meet to keep its authorisation.
What does MIPRU actually require?
MIPRU sets out the structure of the cover rather than leaving it to your judgement alone. In broad terms, a firm carrying on home-finance mediation must hold PI insurance that:
- provides minimum limits of indemnity — a limit for any single claim and a separate annual aggregate limit;
- covers the liabilities that can arise from the regulated activities the firm carries on, including defence costs;
- keeps any policy excess within limits proportionate to the firm's resources — a large excess can trigger a requirement to hold additional capital;
- does not rely on exclusions that would leave typical regulated liabilities uncovered; and
- is appropriate to the nature, scale and complexity of the business.
The minimum limits in MIPRU are expressed as fixed sums that the FCA reviews and updates from time to time (they derive from wider intermediary requirements and have historically been euro-denominated and index-linked). We deliberately do not quote a figure here, because a stale number is worse than none. Read the current MIPRU 3 text on the FCA Handbook, or ask a broker to confirm the limit that applies to your permissions today.
Not sure your current policy meets the MIPRU minimums? We'll check it against your permissions and quote fresh cover.
Get a PI quote →Cover limits: what levels do firms typically choose?
Whatever the regulatory floor, many mortgage brokers buy above it — because a single mis-selling or negligence claim, plus legal costs, can dwarf a low limit. Lenders on your panel, networks and appointed-representative principals may also stipulate a minimum. The table below shows how firms usually think about limits; treat the figures as illustrative options, not required amounts.
| Indicative limit | Typical fit |
|---|---|
| £1m | Smaller sole-trader or start-up brokerages, subject to the MIPRU minimum and any network requirement. |
| £2m | Established firms with a broader client base or higher-value cases. |
| £5m+ | Larger practices, firms handling complex or specialist lending, or where a lender/network mandates a higher floor. |
The right answer depends on your case volumes, average loan sizes, the products you advise on and your claims history — not on a rule of thumb.
What if you can't get PI, or the excess is high?
MIPRU recognises that some firms struggle to obtain PI on standard terms, or can only get cover with a large excess or restrictive exclusions. Rather than simply barring those firms, the rules generally require them to hold additional capital resources to offset the gap in cover. In other words, PI and capital work together: a shortfall in one can raise the requirement in the other. If your renewal comes back with an unusually high excess or a carve-out for certain activities, that is a signal to check the capital consequences before you accept it.
Firms that are appointed representatives are usually covered under their principal's arrangements, but the principal remains responsible for ensuring the requirement is met. Directly authorised firms must arrange their own compliant policy.
Mortgage vs insurance mediation: one policy or two?
Many brokers hold permissions for both home-finance and insurance mediation. MIPRU 3 applies to both, and the PI requirement is designed to sit across the firm's regulated activities. A well-structured policy should reflect the full range of what you do — mortgages, general insurance, and any other regulated work — so there is no gap between your permissions and your cover. If your permissions have changed since your last renewal, your policy schedule should change with them. You can start a review of your cover here.
A word on keeping current
The FCA updates the Handbook, and MIPRU's monetary limits in particular are revised periodically. Anything you read online — including this page — can fall behind the rules. Before you renew or buy, confirm the figures against the live MIPRU 3 text on the FCA Handbook, or have a broker confirm the current minimum for your specific permissions. Treat the published rule as the authority, not any secondary summary.
Common questions
Is professional indemnity insurance mandatory for a mortgage broker?
Yes. Under FCA rules (MIPRU), a firm carrying on regulated home-finance mediation must hold PI insurance that meets the required minimum limits and covers its regulated liabilities. It is a condition of keeping your authorisation.
How much PI cover do I need?
At least the MIPRU minimum limit for your permissions — a single-claim limit and an annual aggregate — but many firms buy higher to reflect their case sizes, panel or network requirements and claims risk. Because the regulatory figure is revised over time, confirm the current minimum before you buy.
What happens if I can only get cover with a big excess or exclusions?
MIPRU generally requires firms with restricted PI cover to hold additional capital resources to make up the shortfall. Check the capital impact before accepting a high excess or a policy that excludes some of your activities.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.