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FSA’s accessible guide for small firms

I make a habit of visiting the small firms section of the Financial Services Authority’s website, particularly the bit that used to be labelled ‘mortgage advisers’ but is now entitled ‘mortgage and other home finance advisers’.

Recently I noticed a link on the page that I don’t recall seeing before to a publication called Key Rules for Mortgage and Home Reversion Brokers.

Rules? What happened to principles-based regulation? But as we are sometimes reminded by the FSA, principles themselves are rules and we also need a framework to provide the foundation for upholding the principles. So what does the publication contain and is it worth printing off a copy to circulate and keep handy for reference?

The first thing to note is that the document is not dated. To authorised firms concerned with meeting compliance, the importance of dating documents correctly cannot be overstated. Proof must be on hand that all required documents are produced and read at specific times.

Also, it’s second nature to check the date on any reference source, not just those relating to regulation, to ensure it is up to date. So the regulator’s habit of not dating its publications is hard to swallow.

However, the title of Key Rules reassures us that it was current as of April 6 this year, because this must have been the date when the document was revised to include home reversion brokers who became regulated at that point.

Having had my say about the lack of dating, let me stress how useful this publication could be for small mortgage businesses that want to stay compliant but who get lost when they try to look anything up in the Mortgage Conduct of Business rules.

As the introduction states, the point of the publication is to make the FSA’s rules more accessible, so it is written in plain language and sticks to commonly used terminology such as mortgage instead of regulated mortgage contract.

Overall, the information is clearly set out, with lots of sub-headings, bullet points, tables and highlighted sections to help readers quickly get to the bits they need. And for those of us who are not always overjoyed at having to use the intuitive and time-consuming method of roaming around websites to unearth information, the Key Rules document possesses those twin pillars of research – a contents page and an index – that most rational seekers of information need to help them navigate.

The contents of the publication are split into five sections in addition to the contents, introduction and index. First of all is a table showing the regulator’s 11 principles for business, with the key terms from each principle highlighted – for example, integrity for principle one, skill, care and diligence for principle two and so on.

This is followed by the main section, which covers various aspects of MCOB, including financial promotions, disclosure and advice. Here, the ‘General’ sub-heading covers useful information, such as the correct wording for expressions such as higher lender charges, inducements and excessive charges.

Then there’s a section setting out the requirements re-garding complaints handling, followed by information on the E-Commerce Directive that must be adhered to in addition to the usual MCOB requirements.

The publication ends with a section setting out systems, controls and record-keeping requirements.

The Key Rules introduction carries its own health warning. It does not have the status of the guidance seen in the regulator’s Handbook, and in the event of a conflict between the two, the latter takes precedence.

Having noted this warning, we should also remember the recent speech made by Mandy Spink, head of mortgages and credit unions at the FSA, in which she said that small mortgage firms should become better at engaging with the regulator’s communications. So no matter how long this publication has been available, it will be worthwhile to have a few well thumbed copies of the Key Rules around the office if and when the FSA comes knocking.


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