Brokers bay for FSA’s blood at Expo
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Walking into the Mortgage Business Expo 2009 there was one clear difference from the previous year - the amount of people in attendance.
Historically the Expo has been held at Earls Court, but this year unsurprisingly it has been condensed into its sister site Olympia 2, so it’s hard to tell if the hordes of people have actually increased in number or the room has just shrunk in size.
The highlight of the day was when Lesley Titcomb, director of small firms at the Financial Services Authority, took to the stage to deliver her speech on the Mortgage Market Review.
Demand was so high to hear Titcomb’s wise words that the doorman was having to refuse entry to brokers, eager to listen to what she had to say.
It was feeding time for the wolves as Titcomb got to the stage to explain the MMR and what it meant for brokers and how it would improve the mortgage market.
After going through the motions and regurgitating what the review meant for the market it was time for brokers to have their say.
Brokers were not pulling any punches when it came to telling Titcomb exactly what they thought of the FSA and its extra compliance, with brokers using question time to ask what good the extra compliance was doing and why they were paying their regulatory fees.
Titcomb was also ambushed as she left the theatre with brokers wanting to voice their concerns about where the FSA was heading, the message was clear - the FSA was out of touch with the broker community.
Titcomb made two major points in her speech.
She tackled head-on the criticism that the ban on self-cert could lock out the self-employed from the mortgage market.
She claimed that there was no reason why a self-employed or contract worker would not be able to verify income and that the requirement for self-employed workers to show three years’ worth of accounts had never been mandated by the FSA.
Fair enough but it is vital that the regulator comes up with a blue print for lenders that ensures the self-employed are not now barred from the market.
Lenders such as Platform have said publicly that they are looking to come up with a solution for the self-employed that works within the principles of the Mortgage Market Review.
The regulator needs to ensure that it and other lenders are given the tools to make that a reality.
And while Titcomb did give the first hint that the FSA is working towards working against dual pricing in true FSA style she did not give any specifics as to what it was actually doing to eradicate it.
She said the regulator questioned, where an intermediary product was of such poor value compared to a direct product from the same lender, why lenders would continue to market that product and that it expected lenders to act “sensibly” and with “integrity”.
Unfortunately, as the regulator has found both to its and our cost, there are massive problems with providing people with loosely framed principles to adhere to.
From a lender’s point of view, if you have staff to keep busy within your branches or are trying to slam on the breaks to the amount of lending you’re doing, on that basis it’s perfectly sensible and acting with integrity to dual price.
Which gets us back to square one and to brokers’ chief gripe - that dual pricing fails to treat either customers or brokers fairly.
As with a lot of what the FSA says, it seemed to leave a bitter taste in the mouths of the brokers.
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Readers' comments (27)
Anonymous | 12 Nov 2009 12:38 pm
Does the FSA lack the moral authority to force through the MMR?
It's fine to consult, but they should not make major structural changes until after the next election.
A new regulator will have the authority and will hopefully not be tainted with the "them and us" stigma associated with our current regulator.
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Mike Davies (ex Infinity Mortgages Limited) | 12 Nov 2009 12:44 pm
I don't have a great deal of sympathy with the broker community as a whole as it was their misuse of self-cert (an FSA speaker 18 months ago told me that he though around 46% of all self cert apps to the intermediary only lenders were fraudulent in that income was inflated or actual employment details mistated). Combine this with lenders not checking plausibility too carefully (I spotted an applicant who purported to be an account but the cheeky s*@ had put the FSA address as his business address)and I can understand the FSA's jaundiced view of self cert as a product offering.
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Anonymous | 12 Nov 2009 12:50 pm
I really don,t understand the Fsa and especially the way it acts and the people it employes, I had the misfortune to have a meeting with somebody from the fsa they are a very strange bunch of people who seem to enjoy rubbing peolpe up the wrong way, they are highly paid and have no idea about the mortgage market God help us all
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Adrian Garside | 12 Nov 2009 12:59 pm
I do wish the FSA would engage in proper consultation with the broker community.
But equally, I do wish the broker community would demonstrate that they are able to engage in a proper consultation.
Seems to me that most of the time we are our own worst enemies. If we appear to be a bunch of screaming whining dodgy moaners incapable of coherant thought, that is how the FSA will (continue to) treat us.
We should not be proud of things like 'feeding time for the wolves', 'not pulling punches' and 'ambushed'.
Equally, the FSA should not treat us in such a fashion as to engender such behaviour from the adviser community.
However, I think it's up to us. I wish we'd act like professionals. If you saw GP's or accountants or solictors acting the way we do, you'd think it reflected badly on them, yet we suggest that we are on a footing somewhere equal to these other professions.
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Anonymous | 12 Nov 2009 1:04 pm
We are banging our heads against a brick wall
The FSA would prefer to have customers to go direct not via advisers as they clearly neither have the appetite or the resoruces to deal with our sector
As for permissions well they should have asked relevant questions to sub prime lenders before giving them permissions to offer NINJA (No income no job)mortgages
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Chris Pinkney | 12 Nov 2009 1:08 pm
I was at the exhibition yesterday and heard what Lesley Titcombe had to say and the majority of it made sense and dispelled some of the myths and nonsense which has been circulating in the press. I don't think the majority of us were baying for blood as your sensational headline indicates, I believe we wanted to hear from the horses mouth what was being discussed. I for one will be looking to attend an FSA roadshow and take part in the consultation process. I think if more of us do so and stay away from silly headlines the better service and regulation process we will get. I agree with Mike Davies, there was massive missuse of self cert and fast track, with regard to self employed are we saying there should be one set of accounts for the tax man and one for the lender? We all end up paying, as we are now, for the people who want to abuse the system. Whatever the colour of the next government the FSA are not going away, they may get split up and a change of name but regulation is hear to stay. Join the debate and lets push for alevel playing field, if no one talks to the FSA we'll get what we're given....
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Anonymous | 12 Nov 2009 1:11 pm
The FSA are totally out of touch with the Mortgage market & the important role that brokers play in assisting clients to find the best possible solution or product to meet their needs. The current climate has resulted from a lack of supervision & regulation of lenders by the FSA, not mortgage brokers.
Hopefuly the Tories will win the election next year & the FSA employees will then realise that their days are numbered.
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MPlatt | 12 Nov 2009 1:21 pm
Mike Davies (ex Infinity Mortgages Ltd) does not mention what his calling is now.
I take offence at his collective view of brokers submitting fraudulant self cert applications, I for one did not practice this.
Lenders should take a look at themselves, can anyone remember The Money Programme - BM Solutions branch advisers deliberately fraudlulantly encouraging customers to lie on their applications - increasing salaries from 20k - 50k in order to meet criteria. This was caught on camera. No broker anywhere near!
Also lenders BDM's - If you say this then we won't ask for proof of income etc etc.
I agree that amongst brokers there are bad apples - but don't for one minute dare to blame us for the current mess!
Those who live in glass houses!!!!!
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Stephen Yates | 12 Nov 2009 1:31 pm
I agree with Mr Garside - we are going to, collectively, be treated like a 'poor relative' [to the other professions] for as long as we continue to throw our toys out of the pram. Things are not right as they were and would be if the credit crunch hadn't happened. Things need to change. The FSA have gone for the sledgehammer to crack a walnut approach and are wrong. But professional debate and lobbying is the way forward and simply sensationalising the issues in the mortgage press and ejecting toys out of our prams at the FSA just reinforces their argument giving them grounds to believe they are right. It does nothing to further our aims. Comments like the third one are ill-conceived and project a far from professional image of our community; who cares of the personality of those that are employed by the regulator. It is their policies and rules and, specifically, proposed rules that are important. If I attacked that person for their views would it have any bearing on the MMR? No. Please, peers, wake up do something constructive and stop whinging. Otherwise we might as well give up now.
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Frank Jurga | 12 Nov 2009 1:48 pm
The loss of self-cert is stupid. We are encouraged to help all clients with money and tax saving ideas - many of my clients have year end 30th April. 09 accounts don't have to be filed until Jan 2010 so latest true accounts filed by Jan 2009 would only show true profit to 30 April 2007. But then we can't expect the pen-pushers at the FSA to know or even understand this stuff. Financial Services is - don't faint, this is quite a revelation - a SERVICE industry - isn't it strange that the Regulator only understand products. We can show management accounts but lenders don't want to know about these - and we're back to square one. With enough equity in the property, the lenders were saying you know your business, your status is excellent so we'll lend. Even affordability calcs would take into account current drawings and not profits from 2 and a half years ago.
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