Last week the Financial Services Authority published Consultation Paper 146: The FSA's approach to regulating mortgage sales. From around mid-2004, intermediaries that sell mortgages will need to be authorised by the FSA.
As we reveal across 15 pages in this special issue of Mortgage Strategy, there are no real surprises in CP146.
Introductions to any authorised firm, whether independent or otherwise, will be exempt from regulation; mortgage clubs and packagers would not “as the proposed legislation is drafted” “carry on the regulated activity of arranging” and will not, therefore, need to be authorised (broker packagers and correspondent lenders might and will to be authorised); the definition of “regulated mortgage contract” will not change and buy-to-let is excluded; Section 155 of the Consumer Credit Act is to be “carved out” and the FSA given new powers of protection; nothing in the new regulatory structure will adversely affect lenders' ability to securitise; local authority staff will not be brought within the scope of the FSA regime; the Mortgage Code will cease to exist by 2004; there will be at least 12 months in the run-up to regulation for lenders to get systems and procedures in place; the pre-application illustration will remain but in a shorter format than originally envisaged in CP98; the use of credit reference searches by lender will not be restricted; quick quotes that provide customers with personalised product information that is not in the prescribed format of the PAI will be allowed; new disclosure rules mean that customers may be able to compare UK products with those in the rest of Europe; the FSA has decided not to make rules on the 'cooling-off' period and lifetime mortgages are introduced – the new name for equity release products.
The FSA needs your responses to CP146 by November 11. A detailed list of what the FSA wants to know can be found on Mortgage Strategy Online. Simply visit www.mortgagestrategy.co.uk and click on the button 35 questions the FSA want answered.
As the saying goes, the best time to do something worthwhile is between yesterday and tomorrow. Download a copy of CP146 today. It may run to 353 pages and some of it may seem complicated, but the only thing achieved in life without effort is failure.
If you care about your industry and its future, read CP146 and speak up. It may be your last chance.