Approved persons regime will keep the rogues at bay

5 July 2010

Despite all the industry talk about the future of the Financial Services Authority - and you should remember that any change won’t happen until 2012 - we will be continuing the programme of work set out in our business plan.

We recently published the latest instalment in our work to reform the mortgage market to make it more sustainable and work better for consumers.

This latest Mortgage Market Review publication is a combined paper on approved persons and both areas.

You may be wondering what the link is between approved persons and arrears - the truth is there isn’t one.

We’ve combined these elements because they are two areas we can start changing now without affecting any market recovery.

Other changes, such as what we do about income verification and affordability, will be made at the right time in the economic cycle after we have weighed up the costs and benefits.

So we have updated the arrears rules because we found that some lenders have not been treating customers facing payment difficulties fairly. Two firms have already been fined for this and both have had to compensate their customers.

The rule changes make it clear to lenders what we expect, but more important for brokers is the second part of our changes which bring anyone giving advice or arranging a mortgage within our approved persons regime.

This basically means that you will have to be assessed by us as fit and proper to give advice on and sell mortgages, and you will have to keep meeting these standards once you are approved.

We will ensure we give you plenty of information on the new regime on our website over the next year

This will allow us to keep rogue individuals out of the industry and take appropriate action against advisers if they do something wrong, neither of which the current rules allow us to do.

We’re going to apply this regime to those working in lenders too, so we have a consistent approach across the industry.

The same system already works well in the investment industry, where professionals giving advice on pensions and investments have to be approved by us.

Some of you may already be approved for investment advice so you will be familiar with how the system works.

But for most of you I expect the application process and the fit and proper requirements will be new.

We’ll ensure we give you plenty of information on our website over the next year so you know exactly what you have to do and when.

Professionals already approved in some form will be able to go through a simplified application process but if you are not approved in any way you will need to send in an application that includes a criminal record check. We’ll start taking applications next spring.

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