The Financial Services Authority has calmed industry concerns over the payment of proc fees on pipeline mortgage cases started before Mortgage Day but completed afterwards to brokers or networks which fail to get authorised by October 31.
Lenders such as HBOS subsidiary The Mortgage Business were worried they might fall foul of the regulator if they paid a proc fee to advisers who placed the case before Mortgage Day thinking they would get authorised but then finding out otherwise.
But the FSA says that as long as the work was done before October 31, the proc fee payment is a contractual issue between the lender and the other parties rather than a matter for the regulator.
FSA spokesman Robin Gordon-Walker says: “If the work was done before Mortgage Day the question of the proc fee is a contractual matter. The fact that it is paid after Mortgage Day is a matter of invoicing and would not be caught by us.”
TMB managing director Bill Dudgeon says: ” I welcome this clarification from the FSA. It seems a sensible approach – I could not see what lenders could do other than pay for work that has been done.”
BM Solutions says the FSA's stance was outlined in MCOB transitional provisions. The FSA states MCOB applies to regulated mortgage contracts entered into on or after October 31 but variations to such contracts after that date may be subject to the Consumer Credit Act 1974.