FSA registration plan gets a mixed reception
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MICHAEL COOGAN, SLEDGEHAMMER TO CRACK A NUT
The Financial Services Authority’s plan to individually regulate mortgage brokers has divided opinion on whether this would be the best way to tackle rogue advisers.
The regulator has published a consultation paper that sets outs its proposals for extending its approved persons regime to cover all mortgage brokers as well as those who arrange non-advised sales.
The change would affect those who arrange regulated mortgage contracts, regulated sale-and-rent-back agreements, home purchase plans and home reversion plans.
Alan Cleary, managing director of Exact, welcomes the proposals. He says that the present system requires a great deal of digging down through a list of approved persons and networks to ascertain the original brokers of deals.
Cleary says: “This change would make it much easier for lenders to identify poor performance among brokers and let them ring-fence rogue brokers out of business.”
But Richard Morea, technical manager at London & Country, says that if brokers are carrying out the detailed record-keeping that is required by the FSA there should not be a problem tracing who originally gave advice.
He says: “The benefits of this proposal are not aimed at brokers, they are aimed at consumers and boosting accountability.
“Obviously, most brokers have nothing to fear from that but the costs will be borne by advisers for no immediate benefit to themselves.”
Michael Coogan, director-general of the CML, says: “At first glance the proposed extension of the approved persons regime sledgehammer to crack a nutto both lenders and brokers appears heavy-handed, at least as far as lenders are concerned. This could be a sledgehammer to crack a nut.”
Coogan also believes the cost of implementing the proposal has been underestimated.
The FSA also plans to tighten its rules on arrears management. Under its proposals firms will not be able to add early repayment charges onto arrears charges, nor will they be able to apply a monthly arrears charge in cases where the borrower in question has an agreed payment plan in place.
Lesley Titcomb, head of small firms at the FSA, says: “Lenders should be in no doubt with regard to their obligations to customers who fall behind with mortgage payments. They must realise that such a circumstance does not represent an opportunity for them to generate more profit.”
Readers' comments (1)
Anonymous | 1 Feb 2010 3:45 pm
Advice procedures of old may not have pinpointed bad advice but since the collapse of the banks the FSA have become far more stringent as has each lenders criteria.
Self cert and fast track mortgages are all but gone so why is the government wasting its time and our money on this? All mortgages nowadays need to have complete documentation shown. Full sets of accounts and clarification of income are required.
With mortgage approvals only just coming out of an all time low surely the government should look at other parts of our failing economy rather than crippling the honest brokers and regulating the already regulated.
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