FSA predicts network expansion

The FSA&#39s mortgage policy chief says there will be an expansion of financial services networks to take care of mortgage broker compliance post-N4.

Susan De Mont, manager of mortgage policy at the FSA, says: “I foresee networks expanding services to mortgage intermediaries.

“I&#39d be surprised if networks didn&#39t develop for mortgages and general insurance. There are some excellent independent mortgage advisers and I&#39m sure the market will support them.”

De Mont warned that the choice between independent and tied status will have “serious implications” for a broker&#39s business.

Brokers may be able to retain independent status as part of a network. “That depends on what we decide independent means. If we decide it is enough for the network panel to be sourced from the whole market, then yes.”

This would parallel the investment business approach, where brokers claim independent status so long as their network panel is chosen to represent the whole market.

This definition of independence would involve a change for mortgage brokers.

And she adds: “As far as mortgages are concerned, &#39independent&#39 doesn&#39t mean that you look across the whole market, so there is a risk of two separate definitions.”

De Mont plays down industry concern over filtering questions – a method of non-advised mortgage sale attacked for being overly prescriptive upon brokers – and says: “The name is a mouthful so we may change that. But this is what happens already – intermediaries ask questions to narrow the choice, then it&#39s up to the consumer.

“We decided it is appropriate for that to continue, but with some regulation around it.”

The FSA expects smaller firms to rely heavily on appointed representative status to take care of compliance. De Mont says: “Appointed representative status is definitely an option which will be useful for smaller firms.”