The regulatory environment

The Regulatory environment has never been more dangerous for the mortgage broker or the intermediary mortgage lender. For those that thought the period between the end of the FSA and the beginning of the Consumer Protection and Markets Agency (CPMA) was going to bring in a benign period for regulation think again.

The FSA is going to be around for a few years yet and they have started to show that they mean business.  The first phase of which includes the new affordability rules and the banning of self-cert and fast track.

This will change the intermediary market in a radical way over the next two years and the new CPMA will inherit a different mortgage market to the one we see today, or the one we had a few years ago.

The new approved persons regime will also have a significant effect on the market when every mortgage adviser has been identified by the FSA. This will have an impact on how lenders deal with their distribution and will bring problems in how to identify the advisor on each case. It will also bring the mortgage industry in line with the life and pensions industry and open the door to further regulation along the lines of the RDR.

The product development process will also soon come under the watchful eye of the FSA as the regulatory web starts to tighten around the product development process. Marketing departments are not use to dealing with the FSA but they will soon have to get up to speed.

The FSA will want to make sure that the products that lenders launch do not have a ‘toxic combination of characteristics’ and are promoted to the borrowers they are designed for.

This new environment will require a more radical response from the industry and going forward lenders and their intermediary partners will need to speak with one voice even if they are represented by different trade bodies.

Otherwise the FSA will apply the divide and conquer maxim and will use the divisions in the industry to justify further intrusions into the market.

The danger lights should be flashing, not only in compliance departments but all over the mortgage industry.