Fame at last. Mortgage Strategy’s exclusive interview with Mandy Spink, the Financial Services Authority’s head of mortgages and credit unions, referred to me and my recent musings on the regulator’s Tre-ating Customers Fairly pro-gress report.
Does it get any better than having your comments raised with the top brass at the FSA? Well, yes, but you take what you can in this business.
In my column I had queried the outcomes versus process balance of the FSA. Should the most important thing not be whether firms treat their customers fairly rather than working out whether process deadlines have been hit or not, I wondered. Apparently not, according to Spink.
In looking at Spink’s response to my concerns, I was reminded of a column I once wrote about industry terminology – it’s used too much and it doesn’t help consumers or the industry. While I’m guilty of it myself, the regulator’s representatives should try to speak in a language we can all understand.
“Principles-based regulation isn’t only about looking at outcomes,” says Spink. “Our job is to play a part in setting outcomes and one of the ways you can see whether firms can achieve satisfactory outcomes is to look at their processes, so we’re never going to get away from not looking at these. We are not going to be prescriptive about the processes used to achieve outcomes.”
I am tempted to say “eh?” but will refrain from doing so. Know your audience is good advice and while this type of comment may go down well with compliance experts, it’s not so enlightening for brokers who want practical advice on what this means for their businesses.
I realise that someone from the FSA will pipe up at this point and refer me to its website but that’s not the point. Spink says one of her great loves is dealing with small firms. I’m not sure dealing with the FSA is a love of many small firms but I hope that when they speak to each other, they talk in English.
Mishandling complaints is costly
A few weeks ago, I commented on the increase in the number of mortgage complaints received by the Financial Ombudsman Service and suggested that some firms were rather blasé about their chances of receiving more complaints in the future.
Of course, the big issue when receiving a complaint is how you react to it and the regulator is keen for firms to ensure complaints are used to improve processes and systems.
If you were in any doubt about the importance of complaints handling, a recent decision by the regulator should have dispelled your doubts.
The Financial Services Authority issued Kilminster Financial Management Ltd, an independent financial adviser network, a fine of £42,000 for management and complaints handling failings from January 1 2004 to August 23 2006 . Kilminster “failed to treat its customers fairly because it was not handling complaints in good time”, reveals the FSA’s press release. It also says it “did not monitor its staff sufficiently or keep appropriate training and competence records”.
The reasons behind this fine read like a case study of the failings FSA identified in a number of broker firms as part of its quality of mortgage advice work. It was concerned about the lack of robust training and competence schemes in many firms and areas such as record-keeping have been highlighted by the regulator ever since Mortgage Day.
Kilminster has employed more compliance staff and is bringing in consultants to help it with its complaints handling and T&C arrangements.
Could your business handle a fine of £42,000? It’s a costly business to neglect your responsibilities when it comes to compliance.
HIPs are not worth the gamble
The government’s decision to delay the implementation of Home Information Packs until August 1 and make them mandatory only for four-bedroom houses resulted in widespread industry tutting and murmurs of “I told you so”.
But a few weeks on, we are beginning to see the fallout from this decision. Hipstar has shed 40% of its staff with two senior staff members also moving on. And energy-assessors.com has been forced shut down, leaving 100 people unemployed.
It now seems obvious that many other firms will have to follow suit. The government has pulled the rug out from under many feet and for some firms, the only option is closure or redundancies.
To call this an unfortunate situation is a huge understatement. The present uncertainty shows what a shambles the handling of HIPs has been.
As we prepare for August 1 – or not, as the case may be – it is unclear what’s coming next. And if there is no certainty, how can there be any investment or buy-in to this initiative? At the moment, HIPs are not a gamble worth taking.
Next stop, hoody mortgages
In light of the recent news that US street gangs are moving into mortgage fraud, I bring you – is it just me or is there a gap in the market for hoody mortgages? I await David Cameron’s ‘House a hoody’ initiative with interest. Reclaim the streets!