Packagers should consider opportunities in FSA paper

In recent weeks there has been much debate in Mortgage Strategy about the role of packagers but little comment on the hidden opportunities that lurk within the Financial Services Authority\'s Consultation Paper 07/23.

Possibly this is because the paper is entitled Organisational systems and controls – extending the common platform, so it is not easily identified as a paper connected to mortgages.

CP07/23 is a consultation whereby the FSA is seeking to extend many of the systems and controls in place for mortgage and general insurance brokers. It also covers changes to compliance, risk and auditing procedures.

The intention is that firms of all types will be guided by the senior management arrangements, systems and controls set out in the FSA’s Handbook.

Under the MCOB rules, mortgage packaging is not a regulated activity, but CP07/23 puts forward a case for change.

Packagers should read Chapter 6, which is devoted to outsourcing and gives consideration to their relationships with lenders.

Packagers will continue to be unregulated but will have to have outsourcing agreements with lenders that com- ply with the rules and revisions in the Handbook.

In the paper, the regulator admits that at the moment its Handbook offers minimal guidance on outsourcing, but the consultation gives packagers a role in the regulated market. Packagers with satellites will also have to take action under the new outsourcing rules to ensure they remain compliant.

Responses to the paper had to be submitted by March 19 but even if packagers missed that deadline they can still talk about it to their trade bodies, the Association of Mortgage Intermediaries and lenders.

The packager code of conduct is due for publication shortly. This will need to take into account proposed changes to senior management arrangements, systems and controls, communication with lenders and how the new outsourcing process will be monitored.

This should be a boon for all packagers although it won’t resolve the liquidity crisis, of course.

Stephen Atkins
FSA Small Business Practitioner Panel
By email