Many firms will have been working toward regulation for several months and be nearing the final stages. Here are some of the things that should be ticked off your 'to do' list:
Professional indemnity levels confirmed to meet FSA requirements (mortgage and protection levels) – capital and solvency rules reviewed and confirmed
Regulated business plan reviewed (if appropriate)
Senior management systems and controls requirements reviewed against existing practices, changes identified, noted and set in place
Staff training underway. Generic training for those not directly affected, specific courses for those who are
Regulatory reporting requirements understood and systems in development
Inducements review systems in place
New systems signed off by senior management team
New business process reviewed. Where necessary, amendments noted, procedures in place and training underway
Decisions made about use of 'independent' brand and systems in place for fee option
Process for using introducers set up and roles and responsibilities set out
Existing customers contacted and permission gained for continued dialogue, if necessary
Terms of business letters reviewed to ensure: ongoing contact permitted, customer opt-in to allow intermediary to have details of mortgage account once set-up etc.
Compliant Initial Disclosure Document drawn up
Decisions made as to where KFIs will be sourced, suppliers contacted, staff trained
Financial promotions reviewed to ensure compliance with FSA requirements, transitional arrangements drawn up
Record-keeping requirements reviewed against existing practice
Where necessary, agency agreements reviewed and updated (for protection business)
Systems set in place to manage non-regulated parts of buy-to-let etc.
Complaints procedure reviewed against FSA requirements, changes made where necessary, staff trained
Training and competence:
T&C scheme reviewed and amendments made
Focus on ongoing competence requirements understood and staff trained Naturally, this list only touches on some of the issues and parts of it will be more relevant to some firms than others but it is important to realise that regulation will touch every person who works in a firm. The FSA's emphasis on treating customers fairly makes this point obvious.
Regulation isn't just something the compliance team does, it's about setting the right culture in the business. Firms that try to manage regulation as a bolt-on to their business risk spending too much time managing the bolt-on at the expense of seeing customers and making a living.
I should know but i don't
Q: I know mortgage regulation begins on October 31 but if I'm not regulated what are my options
A: It's important to recognise that it becomes a criminal offence to advise on, or arrange, mortgages after October 31 if you are not authorised to do so by the FSA. Individuals found doing mortgage business without proper approval after that date are open to substantial fines and even being barred from working in the industry again.
The alternatives are few – become an introducer of business to a firm that is regulated, move into the non-regulated areas (parts of the buy-to-let or commercial market, if the lenders will accept your business), or exit the industry entirely.
If anyone tries to 'borrow' a firm's FSA number to continue to place business they endanger themselves, the firm whose number is used and perhaps even the lender who accepts the business. The validity of the mortgage may be called into doubt.
The FSA regime is more comprehensive and its sanctions more substantial than that of the MCCB. Time is running out and firms must make their final decisions now.