View more on these topics

Brokers face cost hike to keep up

Mortgage brokers may need thousands of pounds in capital backing to stay in

business after regulation, under proposals the FSA will float in December.

The setting of capital adequacy standards falls under the FSA&#39s high level

requirements for authorisation of mortgage intermediaries. The rules ensure

that a firm has the financial muscle to control the “risk associated with

its business profile”.

An FSA spokeswoman told Mortgage Strategy: “There is some sort of capital

adequacy, or threshold, for every firm we regulate.

“We are not prejudging how capital adequacy may apply to mortgage firms. We

may ask whether people think these standards should apply – it may well be

we think they should, but we will consult on that at the end of the year.”

Such requirements already cover investment firms, insurance companies and


It is not clear how these standards would be extended to mortgage brokers,

or to what extent the capital requirements for individual firms will be

calculated by size or risk.

Pundits say the impact of capital adequacy on the intermediary

market will be proportional to the values set. Rob Clifford, managing

director of mortgageforce, says: “The key thing is where the threshold is

set. If it is set at £50,000 then it&#39s possible that a good number of sole

traders could not continue to trade.” He adds: “I see nothing wrong with

capital adequacy as part of the barrier to entry to the mortgage advice

industry. It is a means of making sure someone is fit to give advice.”

But Bob Riach, proprietor of Scunthorpe-based Riach Independent Financial

Advisers, says: “I don&#39t see why this should be relevant for brokers. We&#39re

not handling a client&#39s money, and we are only introducing them to a lender

after all.”


Stop moaning about the new exams

From Kevin ReesI write in response to the “long in the tooth” mortgage advisor (Letters, Mortgage Strategy August 19). I&#39m afraid I have no sympathy either for him, or for any of the elder statesmen who are constantly complaining about sitting the CeMap exams. He may well have been in the industry for 26 years […]

My Mortgage week – Jeff sutherland-kay

Monday: One of the wonderful things about having left Alliance & Leicester after nearly 24 years is that I don&#39t have to get up early. Why then, am I up at 6.30? Still, I suppose that&#39s later than when I was on the treadmill so that&#39s some consolation. Manage to shave without slicing bits off […]

Scottish economy continues to underperform, says cebr

Official data now shows that the Scottish economy is in recession, the cebr has warned. There are some explanatory factors. First, the consumer boom which has boosted the UK economy has been much weaker in Scotland than the rest of the UK. Second, agriculture has been hit by last years foot and mouth outbreak. Third, […]

MarketPlace launch 2 year discount

The MarketPlace at Bradford & Bingley, has launched a 2 year stepped discount mortgage funded by Bristol & West. The product has an initial pay rate of 2.95%. Key features include: o 3.00% discount until 31/10/03 o Followed by 0.75% discount until 31/10/04 o £300 cashback o Maximum Loan to Value of 95% o Free […]

Budget summary – March 2016

This week’s Budget looked as if it would be a difficult one for the Chancellor, with disappointing economic numbers and the need to avoid ruffling feathers ahead of June’s in/out referendum. Nevertheless, Mr Osborne did spring a few surprises, including some tax reductions. So how does this budget affect you? If you are – or […]


News and expert analysis straight to your inbox

Sign up