The MCCB has welcomed the publication by the Treasury of the Regulated Activities Order and also the FSA's consultation paper (CP146) on its high-level approach to implementing regulation and "near-final” rules on information disclosure requirements.
The MCCB will be studying the 350 plus pages of CP146 in great detail and will respond to the consultation in due course. Its initial reactions to CP146 include a welcome to the proposal to implement clear "grandfathering" arrangements for those advisers who have acquired their professional mortgage qualifications under the MCCB's own training and competence requirements. Additionally, it says the FSA's strong support for the qualification deadline of 31 December 2002 is an excellent endorsement of the MCCB's key strategy to raise industry standards.
The commitment by the FSA that the future statutory authorisation process will include provision for "due credit" for MCCB-registered firms in "good standing" is also a welcome confirmation.
Initial MCCB concerns resulting from CP146 include the proposal that the FSA is consulting on a move away from the requirement for full disclosure of fees as currently required under the mortgage code. The MCCB's own regulatory experience indicates an increased potential for consumer detriment where fees are not fully disclosed.
The MCCB warns that proposals for providing mortgage advice may lead to a lessening of the clarity currently afforded the consumer under the code. In particular, the lack of a requirement for written confirmation to the customer of advice received (sometimes known as the 'Product Confirmation' or 'Reasons Why' letter) is, it feels, a significant omission. This lack of documentation may make the complaint and redress process more difficult for both consumers and firms.
MCCB chief executive Luke March says: "The publication of the RAO and CP146 allows the industry to consider the proposed new statutory regime before it takes shape - and all practitioners need to study, digest and respond with their own views to the FSA consultation – as we will be doing. The Mortgage Board is helping the process by distributing an FSA newsletter, containing a summary of CP146, to all our 12,000 plus registered firms in August.
“I am pleased that the importance of the Board's continuing work in regulating the industry and raising standards has been positively recognised and endorsed - particularly in the areas of qualifications, training and competence and "due credit" the FSA intends to bestow on registered firms
“We will continue to work closely with the FSA and Treasury to ensure that there is a smooth transition to the new statutory regulatory regime and, supported by the industry, will ensure that the Mortgage Code and our rules remain effective in protecting the consumer in the two year plus transition period."