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The AMI bridge over troubled water

Of the psychological phenomena that affect us all from time to time it&#39s fortunate that anxiety and uncertainty are among the easiest to overcome. Stakes often appear higher than they really are and molehills become mountains until we finally confront whatever it is that&#39s concerning us.

My arrival at a recent industry conference brought this home to me, and mirrors the uncertainty facing some small firms. I was attending a meeting of senior legal and compliance figures following an 11th hour invite, arriving belatedly for the afternoon session. The event was held in one of London&#39s grand guild halls and, having wandered past a deserted reception and through the imposing inner halls, I arrived at the doors of the conference hall.

In unusual surroundings and with no organisers on hand to point the way, worries about bringing exhibitor stands crashing down, disturbing rows of irritated delegates or entering centre stage onto the speakers&#39 platform sprang to mind. Cue aforementioned anxiety.

Fortunately, my fears of a Norman Wisdom-style entrance never materialised. Not only was my arrival inconspicuous but the room was smaller and the meeting less well-attended than I was expecting. Furthermore, most of those faces listening to the speaker were familiar and were there for the same reason as I was. The transition from &#39outsider&#39 to &#39insider&#39 was swift and without embarrassment.

An odd comparison you might say, but the episode mirrors the situation facing many small firms in the run-up to FSA regulation. The transition process can be lonely and will see unregulated firms entering uncharted territory.

Latest figures from the FSA suggest 3,891 mortgage firms have applied for authorisation with a further 1,320 variation of permission letters sent out to firms already supervised by the FSA. With estimates of a further 1,000 applications from firms who clearly enjoy living dangerously, a final figure of around 6,000 applications for authorisation now seems likely.

For these firms, energy must now be focussed on preparing for the new environment. The transition from the Mortgage Code to statutory regulation requires firms to meet exacting standards on disclosure, PI and capital, training and competence, record-keeping and complaints handling among other things.

By outlining the main areas of change and adjusting the component parts of their businesses, firms can quickly overcome the anxiety that results from uncertainty and confusion over the rules. Once these features are recognised, the landscape becomes far less threatening and intimidating than was previously the case.

So, if your regulation project raises as many questions as it answers, it is important to remember that a &#39phone a friend&#39 option exists. The AMI helpdesk has helped hundreds of members resolve difficulties in recent weeks.

Also, though I&#39ll stop short of claiming that they&#39re page-turners, AMI factsheets may be just the thing to help you unwind this summer.

Factsheet 7: Setting up a mortgage regulation project and Factsheet 10: A tale of two regulators can be downloaded at

I should know but I don&#39t

Q: What does the FSA mean by controlled functions?

A: Under the FSA regime, authorised firms will have to allocate key functions to its senior management figures. The FSA has taken this approach to ensure there is no ambiguity over responsibility for defined functions within a firm.

Each function performed by an approved person has particular regulatory significance and is designed to ensure adequate checks are in place for activities such as monitoring company finances, sales processes and compliance. The FSA has created 27 controlled functions to be allocated among a firm&#39s approved persons. Ownership of these duties is declared in the approved persons&#39 application form HSF2, and the FSA must be notified of any changes to this.

Not all of the 27 functions will apply to an intermediary firm. Of the five categories, the governing functions, required functions, systems and controls, and significant management functions relate directly to mortgages. Individuals may also carry out more than one CF. A full list can be viewed at:


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