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A last-minute checklist for brokers

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 &#39to do&#39 list:

Internal controls:

• 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 &#39independent&#39 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&#39s emphasis on treating customers fairly makes this point obvious.

Regulation isn&#39t just something the compliance team does, it&#39s 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&#39t

Q: I know mortgage regulation begins on October 31 but if I&#39m not regulated what are my options

A: It&#39s 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 &#39borrow&#39 a firm&#39s 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.


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