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FSA introduces individual registration for mortgage brokers

The Financial Services Authority has today introduced individual registration for mortgage brokers and says each broker will be held “personally accountable” for their actions.

The FSA has confirmed its plans to make all mortgage advisers and those who arrange non-advised sales personally accountable, including in branch advisers. 

They will be required to demonstrate they are ‘fit and proper’, which the FSA says will help it to clamp down on mortgage fraud and monitor individuals in the market.

It is planning to accept individual registration applications from March 31 2011. It aims to publish the final rules, including the definitive implementation date, in September 2010.

The FSA estimates that introducing its approved persons regime will cost it £8.9m and the industry £13.3m. There will be a £450 one-off cost for individuals who are not already FSA approved persons.

Lenders, however, will pay an estimated one-off cost of £600 per person.

The regulator says these proposals should have little additional impact on firms and individuals who already conduct their business in an appropriate manner.

Sole trader and directors of single director firms will be required to register with an umbrella body to obtain CRB disclosures, which will add additional time to the overall process.

It says the impact will be felt most by firms and individuals who do not currently demonstrate acceptable standards. They will either have to improve their conduct to gain and maintain approved person status or their application for approved person status will not be approved.

It says it will not automatically refuse applications for approval from individuals who have criminal convictions, but these issues do raise serious concerns and will need to be taken into account by firms and by the regulator in making a decision about the approval of that individual.

Offences relating to dishonesty are of particular concern, even where the convictions are spent. The FSA says this is because it must assess the likelihood of reoffending. Where firms have taken the view that an individual with a previous criminal record is fit and proper, they will need to address the regulator’s concerns.

They should do this with regard to its fit and proper criteria, and in particular the individual’s honesty and integrity, with reference to the adverse information.

Under its fit and proper guidelines, the FSA will look at whether the person’s reputation might have an adverse impact on the firm for which the controlled function is or is to be performed and at the person’s responsibilities.

It will also consider whether the person has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had that registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory or government body.

It will also want to know whether the person has been a director, partner, or concerned in the management, of a business that has gone into insolvency, liquidation or administration.

In its paper, the FSA warns: “We take non-disclosure very seriously, especially where there is an attempt to mislead. If our vetting checks reveal any matters that have not been disclosed, then applications will be subject to further scrutiny and investigation.

“A person who knowingly or recklessly provides information to us that is false or misleading may be committing a criminal offence and could face prosecution.”



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  • Sam Jones 29th June 2010 at 12:44 pm

    Re the comments on credit searches & adverse credit – this should be no different to any other approved person standard – ie they will look to establish how far a person’s financial situation is likely to influence push selling and poor decision making. So if your debt is from a long time ago and you’re now financially sound, no worries. If you are currently struggling financially, in arrears and not maintaining payments, they are likely to view that as being high risk. They may in these circumstances allow a network to closely monitor your sales and require a plan for how you to intend to get your finances back on track, but otherwise they’d be putting customers at risk. Check out the FSA handbbook re the AP regime – there’s guidelines in there around acceptable standards.

  • Stuart Duncan 26th June 2010 at 7:03 am

    It is a positive move on the whole.

    My main concern remains that the FSA will look at credit records and will question an advisor’s fit and proper status if there is adverse data.

    Thousands of brokers have had their income slashed in half, or worse, over the last two years, largely as a result of FSA neglect in terms of dual pricing and non-advised selling, so it would be iniquitous for the perpetrators to punish the victims.

    As for the first point, RDR read-across to mortgages & protection would be disastrous for advisors and consumers alike and some people need to wake up and smell the coffee.

  • Southman 25th June 2010 at 3:01 pm

    just as long as it isn’t a high street lender doing the credit search 🙂

  • Giles Stafford-Smith 25th June 2010 at 12:02 pm

    I agree with Robert’s comments @ 11.44am. I have also been in the industry for the last decade and have come into contact with these cowboys! I am still in the industry also as a mortgage advisor due to the fact that I have always given ethical advice and have treated clients like one would like to be treated. I may only drive around in my 51 Reg Black Mondeo (owned outright) and own an average sized property (within my means and not mortgaged to the hills), but rather this than having to hand back the keys to a mansion or a supercar on hp that was never mine in the first place, I think you get my point. I am unsure if you will need to be credit searched, however feel this could be a good measure.

  • Rob Roberts 25th June 2010 at 11:59 am

    Regarding credit score – didn’t see any mention of that being an issue, and nor should it as far as I’m concerned. There seems to be mention in the paper of minor adverse credit being allowable (unless I’m reading it wrong) but a credit scoring process shouldn’t be included.

  • Robert Widdop 25th June 2010 at 11:44 am

    Finally…The FSA has done something right for a change!! I firmly agree that individual registration for brokers should have come into force some time ago. This move will help create an overall better image of our tarnished industry. I have always taken pride in my advice to clients over the last 15 years and feel I have always been honest and fair. This is probably why I’m still one of the surviving few mortgage brokers left in this shrinking market. I’m sure you will agree that we did loose the majority of ‘ambulance chaser type brokers’ a few years ago. They believed the market was dead because of the loss of sub prime and could not adapt to change. They left in droves from our industry to chase pipe dream of upfront fee PPI reclaims, and credit card write of reclaims, etc etc etc, need I go on. I just hope this measure will stop these unethical types returning to our world. Does anyone know if an individual’s credit score will be measured when the registration comes into play?

  • Dave 25th June 2010 at 11:22 am

    Rob I think you should make a note to yourself people in glass houses should not throw stones. I used to work with a Rob who advised on mortgages without the appropriate CeMAP qualification. And when caught by the compliance officer came up with an excuses of the dog ate it. This guy also advised a 68 year old woman to raise money on interest only basis so she could convert her home to a B&B with no repayment strategy. I would advise get your own house in order before you comment on others.

  • THe FSA walks on water 25th June 2010 at 11:21 am

    Let us not forget the immortal words of Winston Churchill who indeed prophesised the coming of hopelessly bureaucratic quangos and apparently argued:

    “These people will act as though they walk on water and yet I would contend that for a nation to try to regulate itself into prosperity is like standing in a bucket, and trying to lift yourself up by the handle.”

    …Nuff said.

  • Joy Bowden 25th June 2010 at 10:56 am

    Apology accepted Rob. I understood what you were trying to say & yes sadly it does go on. Your last post was probably more apt than the sweeping generalisation post previously as it tended to tarnish all brokers/advisers with the same brush.

    Have a good day!

    Regards a punchy female !

  • Rob Roberts 25th June 2010 at 10:46 am

    My apologies, Anonymous. I obviously mistook you for one of those brokers who only uses companies with a two-year clawback period regardless of whether they are the most suitable or not. If you are comparing the benefits and advising the client of EXACTLY what they are gaining and losing from the churn and it is in their benefit, that’s a different matter. There are however, sadly, a large number of brokers in the industry who don’t give such high regard to TCF, favouring the “generate as much income as I can regardless of the quality of advice” approach. If you’re one of the good honest guys, hats off to you, and apologies once again.

  • Joy Bowden 25th June 2010 at 10:33 am

    Rob. Do you think we are really that stupid? All of the above we do & having been in the finance industry over 30 years (probably long before you were born)You are missing the point. Churning is fine if you know what you are doing. As long as the benfits are not compromised & is a saving to the client we are all happy!(the rules of churning.

    Regards. A qualified broker & adviser & Cerer qualified, ex bank manager need I go on?

  • Mary Lockyer 25th June 2010 at 10:32 am

    With accountability, the benefit will be improved credibility, the rogues taint the whole industry, and if this means fewer bank staff being prepared to be made accountable, then the lenders will have to co operate and respect the mortgage intermediary, lenders “in house” staff have not all been whiter than white when it comes to fast track and self cert.

  • Rob Roberts 25th June 2010 at 10:21 am

    Sad that many people haven’t taken Charles Haresnape’s comments in the letters section a while back on board. Still plenty of people who like to gripe under “Anonymous” and “Name and address supplied”.

    As to the question directed my way as to how advisers earn any money without churning, that’s exactly the kind of attitude that brings our profession down. How do you earn money? You get up and make something happen, or find another line of work. Establish professional links with accountancy and solicitor practices, establish a joint referral arrangement with an IFA who doesn’t deal with mortgages so that you can assist your clients with their estate planning savings and investments, contact local estate agents and generate additional referral business. Advertise. There are lots of things you can do other than churning policies. Life cover I can live with (just about), but churning anything with definitions (CIC, PHI, etc) is a very dangerous idea indeed and obviously more geared towards being in the broker’s (note I don’t say adviser here) interests more than the clients’.

  • andy 25th June 2010 at 10:15 am

    this is like tarring everyone with he same brush. what will come next!

    re comments about advisors changing policices etc, this could be in the interests of the client, to provide them with the same cover for less cost!

  • mic2002 25th June 2010 at 10:04 am

    Well, this is a step in the right direction as it includes non advised sales staff.Not sure I agree with Rob on the RDR encompassing the mortgage market,however,the next move has to be be towards a profession.But you can’t have a profession while non advised sales are allowed.

  • Richard Farr 25th June 2010 at 10:01 am

    I am glad to see the comments are mostly positive. Many brokers were surprised this wasn’t part of M-day in the first place.

    Part 2 of the policy statement goes onto say: “We are also looking to extend the compliance oversight function (CF10) to this sector.”
    Whilst I agree this also has positive implications for raising standards further in the mortgage market I fear some good firms may still struggle to reach this high bar without getting some help.

    Richard Farr
    Telos Solutions

  • Timberlaid 25th June 2010 at 10:01 am

    Why is it that whenever FSA have something to say, they talk the way a Prison warden would talk to a scumbag inmate?
    I have 2 degrees, worked 5 years in IT in the city, switched over (at bad time) into Mortgage, have gone through CeMAP, joined the best network in the country – I have proved myself time after time (Clean history & background)
    what annoys me is that FSA stance on Mortgage Advisors is that we all are crooks? For a new career im engaging on, it’s not very pleasant image. What do you expect Joe public to think about the whole sector, no wonder public is cheased off.
    FSA, pull your finger out and treat us proper brokers with respect – you sound like the Krays (probably are as well)

  • Colin Warrillow 25th June 2010 at 9:55 am

    It Strikes me that it is another way of getting money into the FSA’s pot in an ever shrinking industry.

  • Joy Bowden 25th June 2010 at 9:54 am

    As a fit & proper broker I have no issue with this except Rob how do you expect brokers to make a decent living at the moment if they dont churn?? If its still advantageous to the client why not? We are in tough exceptional times & have overheads & salaries to pay. Man up!
    In relation to making advisers accountable for non advised sales whats the point of non advice? If you are going to be accountable for everything then it might as well be advised!
    When oh when is the FSA going to be accountable for evreything they do?!!!

    Here we go again!

  • Jackie 25th June 2010 at 9:38 am

    Civil & Corporate Security have been providing the CRB service for years for IFAs and organisations. The FSA failed to ‘police’ companies and allowed the risks which is how they have been getting away with fraud. Brilliant at last!

  • Oktay 25th June 2010 at 9:10 am

    This is nothing but an attack on the “peasants” of the industry.

    I wonder when the FSA is going to attack the lenders? FSA only have the power to pick on individuals… Hopefully FSA will be abolished by 2012 :S

  • anthony clegg 25th June 2010 at 9:08 am

    all sounds good in principle but what will be the financial impact to the small individual sole trader. there is no mention of likely fees

  • Chris Northfield 25th June 2010 at 8:50 am

    I have no problem with personal registration but first, let’s create a properly remunerated viable intermediary channel on a level playing field where genuine quality advice is valued above non-advised sales which add nothing to the customer experience in terms of financial education and give no recourse to clients who choose their mortgage poorly.

  • Sam Jones 25th June 2010 at 8:48 am

    At last some sensible moves by the FSA – it took them long enough!

  • Lisa Hockley 25th June 2010 at 8:46 am

    This is a positive move long term and it will be interesting to see how it all pans out in the future.

  • Robing Banks 25th June 2010 at 8:44 am

    This is good news for the broker market, for the reasons that Rob stated but also the fact that risk averse employees at the banks and building societies might not put themselves forward for the job of mortgage advisor and we could well see a decline in branches offering mortgage aadvice.

  • Rob Roberts 25th June 2010 at 8:36 am

    About time! Get the rogues out of the industry. Let’s hope the next action is to stop commission-chasing and brokers who churn every policy they write every two years to make a quick buck. Have the RDR principles envelope the mortgage market as well as the financial advice sector in my view.