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Following an online compliance research project the company, also known as MS2M, has revealed only 67 per cent of mortgage intermediaries have met the TCF standards.

However the project also revealed overall compliance for mortgage advisory firms was 89 per cent complete.

Julie Alderson, director of MS2M said the findings clearly demonstrated the need for many firms to improve certain aspects of their compliance infrastructure.

She said there was still a lack of understanding as to what the actual requirements were to meet TCF outcomes.

Ms Alderson said: "To be falling short of 100 per cent in certain key areas can prove to be disastrous.

"Small intermediary firms must understand they are not exempt from regulation and if they ignore their commitments they must face the music."

The project was launched in March to assess how well intermediary firms were responding to the finer points of FSA regulation. 130 firms were selected by lenders such Abbey, GMAC-RFC and Halifax, who were sponsoring the project to complete an online questionnaire that would provide analysis of firms' compliance performance.

However Richard Farr, director of the Association of Mortgage Intermediaries, said the trade body had conducted its own research and was confident intermediary firms had been making progress in TCF implementation.