EXCLUSIVE: Regulation must be distribution neutral

Sarah Davidson

December 1, 2011

Paul Smee, director general of the CML, says the Financial Services Authority must make sure that its requirements do not force firms down a particular route.

He said: “Regulation should be pro-competition and neutral about distribution channels as that is the way you encourage innovation.”

Smee said the CML will judge the Mortgage Market Review on whether firms with an existing business model can “live with it”. And he warned new entrants with a different perspective, backing or blueprint could find it difficult to operate under the new regime.

The FSA wants all bank-based or independent brokers to be qualified to the same standard. But the move has sparked a backlash from lenders with large telephony and internet based sales advisers due to the cost of training high churning staff.

Robert Sinclair, director of the Association of Mortgage Intermediaries, said brokers supported choice for consumers.

He added: “Intermediaries believe all those who transact for firms, whether face-to-face or remotely, should be qualified to the same level of competence and all be listed on a common register capable of being accessed by consumers.

“This will also assist in responsible firms managing rogue advisers from the industry.”

David Hollingworth, associate director of communications at Bath-based broker London & Country, said: “It is vital for the regulator to factor that in so as not to create a structure that could hinder one channel more than another.

“The modern consumer demands the ability to access services in an increasing variety of ways and further innovation could be stifled if that wasn’t accounted for.”

Peter Williams, executive chairman of the Intermediary Mortgage Lenders Assocation, said: “The breadth and variety of business models in the UK mortgage industry has been one of its great strengths.

“Regulation needs to keep pace with the direction of travel in the way that consumers want to buy mortgages, advised or otherwise.”

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