In its penultimate annual report the MCCB put an estimate on active mortgage advisers at somewhere between 55,000 and 60,000. It also confirmed that as at July 2003 there were 59,851 individuals who had obtained a recognised professional qualification – either CeMAP or MAQ. Not surprisingly the biggest jump in the numbers of those who obtained an accredited professional mortgage qualification came in the final four months of 2002, which coincided with the MCCB's fitness and competence requirements being fully implemented on December 31 2002.
With the MCCB due to publish its 2004 annual report in a couple of months it will be interesting to learn the new published figures for those who have obtained the relevant qualifications and the impact statutory regulation will have. I would certainly expect that there will have been a surge of activity of individuals passing the accredited qualification in time for October 31 2004.
In my June 14 article I reported on the upturn in activity from advisers enquiring and applying to join the network but what I have noticed this week in particular is the number of enquiries from advisers looking to continue to trade who do not hold an approved exam qualification. All advisers actively selling regulated mortgages post-Mortgage Day will have to ensure they meet the requirements of the FSA's Training and Competence Sourcebook. At present advisers without an MCCB-approved mortgage examination can offer MCCB 3.1 (b) or (c) 'information only' levels of service, and by doing so do not as such make personal mortgage recommendations. It will be interesting to learn how many of these information-only advisers will cease trading on October 31.
Post-Mortgage Day advisers looking to make advised sales (the rough equivalent of MCCB Level 3.1(a) advice and recommendation service level) of regulated mortgage contracts will be required to meet certain T&C commitments. These are to:
Be appropriately supervised
Have competence reviewed regularly
Ensure the level of competence is appropriate to the nature of the business In addition to these commitments advisers will need to have met the exam requirements laid down in the sourcebook. It is well documented that advisers who have been assessed as competent under existing MCCB fitness and competence rules will be automatically deemed compliant under the FSA regime. However, if you have not passed an appropriate qualification and wish to continue to trade, you could look to advise on the non-regulated commercial or buy-to-let markets. Another possibility is to offer your clients a 'non-advised' sale. Rules regarding the non-advised sales of regulated mortgage products are contained within the FSA's mortgage conduct of business rules. To quote MCOB 4.8.1: “If a firm arranges a regulated mortgage contract without giving a personal recommendation, it must make sure that all the questions it asks the customer about the customer's needs and circumstances are scripted in advance.”
It should be noted, however, that brokers offering these non-advised sales will not be able to use scripts designed by themselves as these scripted questions will need to be designed by an individual who has met the sourcebook's examination requirements.
Further rules and requirements for the use of these scripted questions include the fact that advisers must be trained in both the use of the script and what constitutes a personal recommendation and what does not (i.e. you must not give a personal recommendation unless qualified). Advisers must also ensure they stick strictly to the script. There will also be a requirement to keep a record of these scripted questions and these must be made on the date the questions are first year. These records will also have to be retained for one year from the date they are superseded by another record.
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