Legal firm DLA says the Financial Services Authority will have to flex its muscles come Mortgage Day to flush out unregulated brokers.
For regulation to be politically well received and respected by the brokers and lenders who will have ploughed resources into making their businesses compliant the FSA will have to be seen to be taking action on those operating without being regulated Helen Marshall, partner at DLA, says: “There will be those who will not have got their applications in but are still doing business. The FSA will have to show some muscle. I don't know what it will do as it will not have the resources to go after everyone but it has to try politically.”
Before joining the DLA Marshall was head of enforcement at the FSA for nine years.
She predicts the FSA will be provided with information from brokers whistleblowing on competitors. She says that while many brokers openly admit to knowing of others giving advice without having registered with the MCCB few are willing to turn them in.
But she adds those brokers who flout the FSA's rules will be viewed more harshly post-Mortgage Day.
FSA spokeswoman Kate Bristowe says: “It will be a criminal offence to undertake mortgage or general insurance business without becoming directly authorised or an appointed representative, come Mortgage Day.”