The National Association of Mortgage Brokers and Advisers is consulting members on FSA proposals for appointed representatives.
Charles Gooding, chairman of NAMBA, says: “The FSA has published CP159, its consultation on appointed representatives, extending the current regime. It is essential that all mortgage intermediaries read this paper because it creates a new regime for mortgage advice and does not solely apply to those firms and individuals who are appointed representatives in today's investment market.
“The key issue, that first appeared in FSMA 2000, is that firms may not be directly authorised for some activities and an appointed representative for others. CP159 confirms that this rule will also apply to mortgages. It will require special consideration by mortgage brokers who are currently only authorised by the MCCB.
Gooding continues: “The FSA is proposing that those firms who act as appointed representatives will be able to have different principals in defined categories of the investment business, mortgages and general insurance markets.”
The FSA proposes that a firm could have a different principal for each one of 13 categories of substitutable products across the three industry sectors of mortgages, investment business and general insurance.
Gooding adds: “For mortgage intermediaries this means, for example, that a firm could have a different principal for its regulated mortgage business and a different principal for its life and pensions business. We will be asking mortgage advisers to comment on the proposed 'substitutable product categories' and whether this gives them sufficient flexibility to operate their businesses efficiently.
“Advisers will also have to come to terms with the statutory requirement that firms cannot be directly authorised for some activities and an appointed representative for others. ”
He says: “When this is added to the anticipated outcome of the depolarisation consultation, all intermediaries will have plenty to think about.”
NAMBA will prepare its formal response to CP159 after assessing feedback from members.