Individual regulation may come in next year
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Mortgage brokers could be individually regulated as early as mid-2010 under Financial Services Authority plans to fast-track its proposals.
The regulator proposed the individual regulation of mortgage brokers in its Mortgage Market Review in October.
As previously announced, the FSA will release details of its proposals for individual regulation in January. Brokers will need to show they are fit and proper, which means disclosing everything about their past including bankruptcies and suspensions.
Robert Sinclair, director of the Association of Mortgage Intermediaries, says honesty is the best policy when it comes to disclosing in- formation to the FSA.
Sinclair says: “I think there will be a lot more brokers leaving the industry than people expect and it’s clear that honesty will be the best policy.
rokers should fully disclose their past to the FSA. Any criminal records, bankruptcies or suspensions from firms must be revealed.”
He adds that the regulator is more likely to ban an intermediary for non-disclosure than for their past activities.
Paul Day, director at Which Network, welcomes the individual regulation of brokers but says it could lead to extra cost for networks.
He says: “I think it will be a positive step for the industry and consumers, but it could lead to problems for some brokers. Many have genuine reasons for being declared bankrupt and there isn’t such a stigma attached to it these days.”
Day says that as long as individuals can prove they are fit and proper the FSA should not have a problem but networks could foot the bill.
He adds: “This could put a strain on networks as they will have to provide administration services for their members, meaning extra cost. Some networks may charge application fees but these should only be a few pounds.”
Andy Pratt, chief operating officer of Alexander Hall, says: “The FSA should have done this five years ago when regulation came in. That way it could have spotted all the directors of firms who were suspended and then started up again.”
A spokeswoman for the regulator has confirmed that it will be issuing its proposals in January but said it was too early to say what these might include.
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