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We will improve the image of the mortgage market


Next month we are due to publish our final rules which will set out how we plan to extend our approved persons regime to individuals advising and arranging mortgages.

This follows the proposals we published back in January as part of our Mortgage Market Review.

The approved persons system is the way we vet people holding important roles at the firms we regulate to make sure they are fit and proper.

At present in the mortgage directors of the firm or those who hold some other significant influence over the firm that fall within the regime – no sales staff or advisers are included.

We need to change this to improve standards in the industry and make our regulation more effective.

We aim to make mortgage advisers, those who bring about non-advised sales – including those within intermediary firms, banks and building societies – and those with compliance oversight more accountable to the Financial Services Authority by requiring them to be approved persons.

If they meet our test, these professionals will have to maintain certain standards to retain their approved person status. If they don’t, we will take action against them.

Professionals will have to meet and maintain certain standards to retain their approved person status

Extending the regime will bring the mortgage industry in line with the investment market, in which professionals who run companies and those who give advice have to be approved.

We believe the expanded regime will allow for a greater level of transparency in the marketplace, helping us to better track individuals as they move between firms.

Perhaps most importantly, it will help us reduce unsuitable advice as well as mortgage fraud.

We realise that firms may have both one-off and ongoing costs to comply with our regulation, but we think the long-term benefits of the approved persons regime justify this.

Not only will we be able to ensure that those individuals already giving advice and making sales are fit and proper, but it should also prevent rogues from entering the industry in the first place.

All individuals should be accountable for their actions and nobody should be allowed to slip between the cracks.

Some commentators have said we should have introduced this system when we began regulating the mortgage industry in October 2004, and experience shows they are probably right.

But our latest move is part of our more intensive approach to regulation, a path we have been on since the financial crisis highlighted the fact that regulation needs to work better and be tougher if it is to protect consumers and make financial markets work in their interests.

I know that most of you support our efforts to clean up the market by removing poorly performing firms but are sometimes disheartened by announcements about the banning or fining of yet another broker because you worry about this tarnishing the industry’s reputation.

We believe the extension of the approved persons regime will reduce the number of bad news stories and help us improve the image and reputation of the mortgage industry, once and for all.


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