View more on these topics

AMI concerned by FSA mortgage advice findings

The Association of Mortgage Intermediaries says it’s concerned by the Financial Services Authority’s findings on the quality of intermediaries’ mortgage advice.

While the FSA gave larger networks and brokerages a thumbs up, describing them as having “robust” processes in place, smaller firms were found to have work to do to improve their advice and record keeping processes.

Rob Griffiths, associate director at AMI, says: AMI is keen to help ensure that consumers are provided with good quality advice on mortgages, delivered by advisers who are competent, professionally qualified, and adequately supervised.

“We are therefore concerned about the findings of the FSAs thematic work on the quality of mortgage advice.

It is clear that some mortgage intermediary firms have work to do to meet the standards required, particularly in the areas of adviser competence and supervision, record keeping, and monitoring procedures.

At the onset of statutory regulation, many mortgage intermediaries particularly smaller firms, did not have experience of compliance with a regime similar to that of the FSA, and have therefore had a steep learning curve to climb in meeting the requirements.

“Whilst mortgage intermediary firms are responsible for meeting the rules, the regulator also has a role to play in helping firms to understand how to fulfil their regulatory responsibilities, and in doing so, providing an effective regulatory regime for consumers.

Since its inception, AMI says it has worked to provide support to its members in meeting their regulatory obligations, both through the publication of its factsheets and good practice guides, communications at its roadshows and events, and through the provision of its technical advice helpline which deals with hundreds of queries from AMI members each year.

Griffith adds: For regulation to deliver effective protection for consumers, businesses must be able to implement the regime without disproportionate costs or disruption to the day-to-day business of the firm in serving its customers.

Nearly 30% of mortgage intermediary firms are sole traders and a further 10% are partnerships.

“Small firms, in particular sole traders and those with a small number of employees, will not generally have specialised, experienced, compliance staff and will therefore require greater help and support with the interpretation and application of the FSA rules.

“The Financial Services Practitioner Panels latest survey of regulated firms showed an increase in the number of smaller retail firms who were dissatisfied with their relationship with FSA.

“FSA has work to do in reviewing how it allocates resources and considering ways in which it can re-engage with smaller intermediary firms.

AMI is very supportive of the work that the FSA, in particular Stephen Bland and his team, has already carried out to help small firms in this respect.

“However, the results of this study demonstrate that further work is needed. This need will intensify with the move to a more principles-based regulatory regime.

Many larger mortgage intermediary firms feel that FSA resources are not evenly balanced between small and large intermediary firms: they are concerned that many smaller firms are below the FSAs eye-level and therefore beyond the reaches of regulatory scrutiny on a day to day basis.

“Whilst this could simply be a matter of communication between the FSA and the mortgage intermediary community, the results of this study could indicate the need for the FSAs to increase its visibility amongst small firms and send out a clear message to the industry that no firm is below its radar.

AMI would be pleased to work with the FSA to help the regulator provide mortgage intermediary firms with practical ideas on ways to meet their regulatory requirements.

Later this week AMI will publish a factsheet on implementing a Training & Competence scheme in a mortgage intermediary firm.

The objective of this factsheet is to provide straightforward steps for mortgage intermediaries to design, implement and monitor a T scheme for their mortgage advisers. Members are advised to use this factsheet to review current T&C arrangements.

Recommended

BoE serious about keeping inflation low, says Lloyds TSB

The Bank of Englands decision to raise rates in January is a sign that it is serious about keeping inflation low, says Lloyds TSB. Trevor Williams, chief economist of Lloyds TSB corporate markets, says: The timing of the rise is a surprise but the decision isnt. Many forecasters were expecting a move in February so […]

Accord Mortgages has not raised SVR by more than BoE

From Linda WillI was a little surprised to see in Peter Mounty’s comments (Mortgage Strategy December 4) that Accord Mortgages has been criticised for raising its SVR by more than the Bank of England rise – in fact, very surprised as we have not. We raised our base rate by 0.25% on December 4. Linda […]

Rise came to quick, says propertyfinder.com

Propertyfinder.com has warned that the surprise rate rise will mean that the housing market will not be able to cool gradually.The property website predicts that more severe changes will have to be made to the economy if the housing market is to remain stable.Warren Bright, chief executive of propertyfinder.com, says: Todays interest rate increase is […]

Cheshire branch gets star treatment

The Manchester branch of the Cheshire on Cross Street became a film studio for the day as ITV Granada filmed scenes for an upcoming comedy-drama The Good Samaritan.The show, starring Shane Richie, even included a branch staff member as an extra in the scenes due out next year. Sue Davies, manager at the Cross Street […]

How to cut mortgage fraud risk

Recent figures from Financial Fraud Action UK revealed a financial scam was committed, on average, every 15 seconds during the first six months of 2016, says Roy Armitage, head of credit at Lendinvest. That represents a 53 per cent rise year-on-year, with these scams coming in all shapes and sizes. Furthermore, a staggering 56 per cent of […]