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Categories:Regulation

FSA introduces individual registration for mortgage brokers

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The Financial Services Authority has today introduced individual registration for mortgage brokers and says each broker will be held “personally accountable” for their actions.

The FSA has confirmed its plans to make all mortgage advisers and those who arrange non-advised sales personally accountable, including in branch advisers. 

They will be required to demonstrate they are ‘fit and proper’, which the FSA says will help it to clamp down on mortgage fraud and monitor individuals in the market.

It is planning to accept individual registration applications from March 31 2011. It aims to publish the final rules, including the definitive implementation date, in September 2010.

The FSA estimates that introducing its approved persons regime will cost it £8.9m and the industry £13.3m. There will be a £450 one-off cost for individuals who are not already FSA approved persons.

Lenders, however, will pay an estimated one-off cost of £600 per person.

The regulator says these proposals should have little additional impact on firms and individuals who already conduct their business in an appropriate manner.

Sole trader and directors of single director firms will be required to register with an umbrella body to obtain CRB disclosures, which will add additional time to the overall process.

It says the impact will be felt most by firms and individuals who do not currently demonstrate acceptable standards. They will either have to improve their conduct to gain and maintain approved person status or their application for approved person status will not be approved.

It says it will not automatically refuse applications for approval from individuals who have criminal convictions, but these issues do raise serious concerns and will need to be taken into account by firms and by the regulator in making a decision about the approval of that individual.

Offences relating to dishonesty are of particular concern, even where the convictions are spent. The FSA says this is because it must assess the likelihood of reoffending. Where firms have taken the view that an individual with a previous criminal record is fit and proper, they will need to address the regulator’s concerns.

They should do this with regard to its fit and proper criteria, and in particular the individual’s honesty and integrity, with reference to the adverse information.

Under its fit and proper guidelines, the FSA will look at whether the person’s reputation might have an adverse impact on the firm for which the controlled function is or is to be performed and at the person’s responsibilities.

It will also consider whether the person has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had that registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory or government body.

It will also want to know whether the person has been a director, partner, or concerned in the management, of a business that has gone into insolvency, liquidation or administration.

In its paper, the FSA warns: “We take non-disclosure very seriously, especially where there is an attempt to mislead. If our vetting checks reveal any matters that have not been disclosed, then applications will be subject to further scrutiny and investigation.

“A person who knowingly or recklessly provides information to us that is false or misleading may be committing a criminal offence and could face prosecution.”

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Readers' comments (26)

  • About time! Get the rogues out of the industry. Let's hope the next action is to stop commission-chasing and brokers who churn every policy they write every two years to make a quick buck. Have the RDR principles envelope the mortgage market as well as the financial advice sector in my view.

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  • This is good news for the broker market, for the reasons that Rob stated but also the fact that risk averse employees at the banks and building societies might not put themselves forward for the job of mortgage advisor and we could well see a decline in branches offering mortgage aadvice.

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  • This is a positive move long term and it will be interesting to see how it all pans out in the future.

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  • At last some sensible moves by the FSA - it took them long enough!

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  • I have no problem with personal registration but first, let's create a properly remunerated viable intermediary channel on a level playing field where genuine quality advice is valued above non-advised sales which add nothing to the customer experience in terms of financial education and give no recourse to clients who choose their mortgage poorly.

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  • all sounds good in principle but what will be the financial impact to the small individual sole trader. there is no mention of likely fees

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  • This is nothing but an attack on the "peasants" of the industry.

    I wonder when the FSA is going to attack the lenders? FSA only have the power to pick on individuals... Hopefully FSA will be abolished by 2012 :S

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  • Civil & Corporate Security have been providing the CRB service for years for IFAs and organisations. The FSA failed to 'police' companies and allowed the risks which is how they have been getting away with fraud. Brilliant at last!

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  • As a fit & proper broker I have no issue with this except Rob how do you expect brokers to make a decent living at the moment if they dont churn?? If its still advantageous to the client why not? We are in tough exceptional times & have overheads & salaries to pay. Man up!
    In relation to making advisers accountable for non advised sales whats the point of non advice? If you are going to be accountable for everything then it might as well be advised!
    When oh when is the FSA going to be accountable for evreything they do?!!!

    Here we go again!

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  • It Strikes me that it is another way of getting money into the FSA's pot in an ever shrinking industry.

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