Approved persons rules can be a plus

5 July 2010

Momentum is building with the regulator’s Mortgage Market Review. We recently saw the publication of the Financial Services Authority’s policy statement on arrears and approved persons, and two further consultation papers are promised before the end of the year.

The approved persons regime has been prompted by the FSA’s concerns about mortgage fraud and unsuitable advice, along with its inability to track individuals as they move around the industry.

But what will the regime mean for mortgage advisers?

Many firms will argue that their recruitment and compliance processes are already strong enough to ensure brokers provide appropriate advice.
But even for advisers in these firms there will be a heightened sense of responsibility knowing the FSA can approach them personally in relation to any inappropriate activity.

The new rules should be effective in flushing out the individuals most likely to engage in fraudulent activity or provide unsuitable advice.
Fraudsters may not be daunted by the new regime given that they were not perturbed by the potential of criminal charges but it will cut the chances for them to operate.

So is the approved persons regime a good thing or a regulatory overreaction? We should see it as an opportunity for the industry to reassure borrowers and offer an extra level of security, and for brokers to prove how good they are.

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