FSA eases client money rules for mortgage business
The effect of this is that money which advisers receive by way of commission relating to fee-based advice will fall outside the scope of the FSA’s client money rules. This arrangement mirrors one that is already in force for financial advisers on their investment business and will run until a long-term solution is found.
Mike Lord, head of investments small firms division at the FSA, said: “We made this change to achieve the same client money treatment for mortgage business as already applies to investments. In the run-up to depolarisation last year we decided it would be disproportionately burdensome for investment firms to apply the full force of the client money rules on commission money and the same principle applies for mortgage business. This is in line with our aim of keeping the effect of our regulation on firms, particularly small firms, to the minimum that is necessary to meet our consumer protection remit.”