While a principles-based environment might be better for large firms – although I guess history will show it wasn’t better for the economy – it is not appropriate for small and medium firms.
And let’s not forget that the majority of mortgage broker firms have less than three sales people.
I have often wondered why the old Mortgage Code Compliance Board was so successful. After all, it had no statutory backing but still managed to ban and fine rogues. The answer is simple – it was effective.
Member firms knew what was expected of them and were aware of the rules they had to follow.
Neither small nor medium-sized firms have armies of lawyers and compliance consultants who are meant to work out how to comply with principles-based regulation.
The firms I deal with just want to know what is expected of them and they will comply. Small and medium firms have nothing to fear from a shift in the regulatory focus. In fact, they have more to gain than their large counterparts.