I’m sure many readers are finding it hard to believe 12 months have passed since Mortgage Day and the handover of regulatory responsibilities from the Mortgage Code Compliance Board to the Financial Services Authority.The principles-based Mortgage Code, sponsored by the Council of Mortgage Lenders, focussed on practical consumer protection, minimising bureaucracy and enhancing consumer protection and access to mortgage advice – with a direct cost to the industry of less than 5m per year over the five years of the MCCB’s operations. There is no doubt the MCCB played a significant role in paving the way for the implementation of statutory regulation. In its five-year existence the MCCB improved standards across the mortgage market through a range of measures implemented in consultation with the industry. Almost 100 million simple information guides (the You and your mortgage leaflet) were issued to customers. As basic entry standards for the industry all firms were required to hold a consumer credit licence and a minimum level of professional indemnity insurance. Fitness and propriety checks were introduced and applied across all the intermediary firms operating in the industry. Perhaps even more significantly, the MCCB implemented its fitness and competence requirements for all mortgage advisers. In just three years, over 71,000 individuals passed one of the accredited examinations that became compulsory for mortgage advisers under the MCCB. The successful implementation of both the qualification and the MCCB training and competence requirements represented a considerable uplift in standards, of which the MCCB and the industry can be justifiably proud. Other significant achievements included the introduction of minimum standards for complaints handling to complement the Code requirement for firms to refer unresolved complaints to an independent arbitration or Ombudsman scheme with decisions binding on the firm. The MCCB also operated a comprehensive disciplinary process which was implemented where significant breaches were identified from the 2,000-plus compliance-monitoring contacts the MCCB made every year. By the time the MCCB closed it had issued almost 10,000 compliance reports. The robustness of the non-statutory MCCB regime was recognised in the FSA authorisation process through ‘due credit’ and ‘grandfathering’ arrangements. There remains a great deal of goodwill and regard for the MCCB among most professionals in the industry. When present at industry events, I am constantly asked for information about former colleagues. It is therefore pleasing to be able to provide an update (see box). The MCCB’s closure process was devised and rolled out over a three-year period following the government’s announcement of FSA regulation in December 2001. Most remaining staff, including myself, left the organisation at the end of last December – leaving a tiny core of two full-time staff and a reduced board to manage the final closure of the company. Many practitioners from previously MCCB-registered firms might think it inevitable that most MCCB staff would have joined the FSA. I know of at least six former MCCB staff members who have done so and a similar number were also offered roles in Canary Wharf but were constrained by circumstances – such as the need to relocate to London – from taking up these posts. It is nonetheless encouraging that a small core of experienced, ex-MCCB compliance professionals is in place at the FSA. The industry has made good progress under the FSA. I know all ex-MCCB staff are pleased about this as it reflects well on the platform the MCCB left and suggests the general achievement of the MCCB’s objective – a seamless transfer of regulatory regimes with no gaps in consumer protection and no loss of impetus toward higher standards. Many firms remain nostalgic for the MCCB’s regulatory approach and style, not to mention the acknowledged cost-effectiveness of the Mortgage Code regime. But the industry is now better equipped than ever to handle the significant regulatory challenges that lie ahead. MCCB staff have moved onward and upward with many still in the industry
Regarding the destinations of the MCCB’s senior management team, some appointments have already been publicised. MCCB chief executive Luke March, for example, is now in a senior director position in the Royal Mail Group and combines this with his role as chairman of Salisbury Health Care NHS Trust. I know he is enjoying both challenges and, as usual, packing amazing amounts of energy and activity into his schedule. Richard Fox, previously MCCB compliance director, is chief executive of the Society of Mortgage Professionals – a role he greatly enjoys given his great passion for helping mortgage practitioners learn and raise standards. Sue Scott, formerly legal and policy director at the MCCB, is fulfilling similar duties on a part-time basis at the Banking Code Standards Board. The BCSB has taken over the lease on the MCCB’s former small executive office in the City of London so she has not had to move far. A number of the MCCB’s other managers and compliance professionals have taken up posts at large industry players, for example in Network Data, Mortgageforce, Pink Home Loans, National Australia Group and Legal & General. Indeed most of the old MCCB compliance team has been retained within the industry by lenders, networks or larger intermediary firms, or through establishing their own consultancy businesses. Two old colleagues recently met on opposite sides of the fence – one working with a client firm during a routine FSA inspection, the other doing the inspecting. As regards the MCCB’s administrative and helpline staff formerly based in Stafford I’m pleased to report mainly good news with most of them being quickly snapped up by local firms, bodies such as local councils, and by nearby industry players such as Britannia and Staffordshire (now Portman). One ex-colleague now manages front office operations at a local firm of funeral directors – no doubt utilising his skills of tact and diplomacy honed while talking to mortgage firms for five years. Other ex-team members have taken the opportunity to retrain and invest in personal development. Two Stafford-based staff, for example, are now at university. And one highly qualified individual from the MCCB Helpline, having enjoyed a spell at Britannia, is a lecturer at Stafford College. This highlights the diversity of destinations and positive outcomes for most of the MCCB’s former staff.