The Association of Mortgage Intermediaries is to put together a code of good practice for the packaging community.
The move comes in the wake of the announcement by Mandy Spink, head of mortgages and credit unions in the small firms division at the Financial Services Authority, at the Mortgage Summit in April that the FSA saw no reason to regulate the activities of packagers.
The Packager Taskforce met on July 9, when is was agreed that despite the range of business models within the packaging sector, it should be possible to agree on an outline of processes and outcomes, and set out a code of conduct that is capable of delivering minimum standards, if not a series of good practices.
Self-regulation has been a consideration, but the Taskforce appears to have agreed that a code of conduct would work better. Once drafted, it may be possible that it is reviewed and approved by a range of bodies.
AMI believes that, in addition to securing FSA approval for the code of conduct, endorsement should also be sought from the Council of Mortgage Lenders and the Intermediary Lenders Association.
With such endorsements the code would then have the status of industry guidance, and could be used by the FSA, Financial Ombudsman Service and others in any work they undertook to measure the activities of lenders or brokers.
The main purpose of the code would be to give clarity to external observers, and comfort to the industry that the packaging sector has credible and effective standards.
It would also provide additional clarity on where services should start and stop, and what respective parties’ responsibilities are.
A working party of volunteers to be drawn from members of the Taskforce or their businesses is being set up to produce the first draft of the code, for consideration by the Taskforce at its next meeting on September 4.
Nigel Payne, managing director of The Mortgage Business, believes a code of conduct would be welcomed by the rest of the mortgage industry.
He says: “It really is a very sensible idea. The FSA has been clear it is not going down the regulatory route with packagers, but it’s also clear packagers need a voice in the market, and need to be clear about what they are delivering to the market.
“It will be interesting to see what is in the code of conduct, but I would expect it to be a summation of good practice, and it should be helpful in that everyone can sign up to it and say this is how things should be.”
But Nick Baxter, managing director of Mortgage Promotions, says: “It seems like a great idea in theory, but I can’t believe the three main packager alliances will be able to agree on what the code of conduct contains when they can’t even agree on whether or not they should be paying VAT.”