From Michael Ward
I read with interest the editorial in the June 21 edition of Mortgage Strategy but think that 'hanging tough' may result in advisers being left hanging around!
Some networks are cutting fees, which surely is a sign their propositions were not fully thought through from outset. Enable has never planned to charge until regulation takes effect.
It is an interesting fact that based on MCCB numbers of registered mortgage firms and advisers, only a minority of firms registered direct with the FSA in time to be assured of continuing to trade from November (assuming they filled in the form properly).
So what are mortgage advisers going to go? Despite your comments about the networks not having minded to authorise letters from the FSA it is still possible to chose a network.
Some networks, like the one I run, enable, are already IFAs and have been since the days of FIMBRA. A few have the backing of a substantial parent – for example enable is not only an IFA but is part of the Skipton Group. These might just be words to some people, but let me explain why I think it's important.
Being part of a highly regulated financial services group means we are subject to procedures and compliance processes that have been built up over many years and are embedded in our systems and controls. The internal audit processes exist right now in order that we can be compliant today.
This means we have already been able to arrange our PI insurance on terms that provide, at no additional cost to the member, an excess of £500 on all their regulated activities.
So we can be confident that the only charges we will make from regulation day is an adviser fixed fee of £100 per month and a per case fee of £25, which means no percentage deduction from mortgage commissions by the network.
Our technology is second to none and provides seamless integration of true whole of market mortgage advice (we have no panel; you use whoever you want if it's appropriate advice), with a complete panel of the leading protection writers.
So I do believe mortgage professionals can make informed decisions about their future under regulation.
Unfortunately, your last paragraph does worry me. To be compliant each mortgage adviser will need to have completed an initial induction course set by the network. Some may not call it induction but one way or the other principals will need to be able to prove to the FSA that their ARs are fit and proper and are giving good sound advice and fact-finding properly.
The only way to prove that you have done this is by spending time and money on setting up face-to-face assessments between compliance professionals and each adviser.
Also, each adviser will need to provide a 10-year employment history, be credit rated and referenced. If you come across a network that says “Oh, don't worry about that, we'll sort it out later”, or “We don't do that”, I'd beware if I were you as experience shows they and you could be heading for trouble.
So training, testing, role-play, referencing – a lot to do and not much time left. I would say that the advice to wait just a little bit longer is irresponsible and misleading. What are you recommending that mortgage professionals wait for?
My advice is sit down now and plan what you are going to do come November. If it's to go direct to the FSA, start reading the rules and writing your procedures manual. If you plan to become an AR, look for a proper AR model which takes the compliance risk off your shoulders. Look at the quality of the management, assess the depth of financial backing and the preparedness of the offering, ask some difficult questions and apply now, before it's too late.