No MCOB rethink yet, says FSA

The Financial Services Authority says it has no plans to review the Mortgages Conduct of Business rules despite calls from the Intermediary Mortgage Lender’s Association to do so.

Speaking at the IMLA annual dinner last week, Tim Dawson, chairman of IMLA, called on the FSA and the industry to review MCOB in 2006.

Dawson says: “The FSA, with the help of the industry, should take the opportunity in 2006 to undertake a review into the workings of MCOB, looking at ways the rules can be simplified to improve the quality of decisions being made and reduce costs.”

He calls on the FSA to work with the industry to make sure this causes minimal disruption. The review, he says, would also be compatible with the government’s objectives.

Dawson also refers to research undertaken by IMLA members which shows 86% of members think that the Key Facts Illustration does not help or makes no difference to the approach taken by the average mortgage customer, while over 70% feel it brings no benefits at all to customers.

He adds: “It is difficult to see how things will improve unless serious changes are made. It is estimated that regulation cost the industry 200m to implement and between 75m and 150m to introduce MCOB.

“This might have been acceptable if it had delivered a service on a cost effective basis but research shows it has not. We recommend the FSA should seriously consider this.”

The FSA has ruled out a review of MCOB but says it will conduct a review into the overall effectiveness of mortgage regulation.

Robin Gordon-Walker, spokesman for the FSA, says: “In the interests of the industry we don’t want to carry out a review of MCOB at such an early stage.

“A lot of people have worked hard to implement new systems and we do not feel that there is a widespread feeling that people want us to reshape the rules. However, in the longer run it could be a possibility.”