John Malone: Comply or Die
Malone said the media and senior industry figures may have given brokers the message that the responsibility for change lay largely with the lenders but is not the case as the FCA plans to visit regulated broker firms in October.
He said: “If you think there is nothing left for you to do then you are very wrong.
“What have you done in the last four months to satisfy the Financial Conduct Authority that you are preparing for change? If you are one of those brokers who thinks this does not affect you and you don’t need to change then you are in for a big shock.”
The deadline for completion of an FCA online survey, by the person responsible for MMR implantation within the firm, was 31 May. The survey addressed the readiness of the firm and responses will be published later in the year.
An FCA spokesman confirmed that October was the next date in the diary for brokers, at which time they would assess the levels of progress towards implementation.
Brokers will be required to confirm what change management strategy and training they have put in place to ensure their advisers are competent in discussing issues such as rolling fees into the mortgage loan and assessing the plausibility of an exit strategy for an interest-only mortgage.
Malone said the removal of the non-advised sale and the responsibility for affordability assessments being given to the lenders provoked a euphoric response from brokers but in fact it has acted as a trap.
He said: “It is still your responsibility to obtain and hold documentation on file which proves you assessed the application and were satisfied the loan was plausible. It is your responsibility as much as the lender’s to understand the applicant’s circumstances and assess suitability.”
Brokers must collect and store data on all aspects of the application so that they can satisfy the lender when it requests management information on the borrower.
Malone said that lenders will be required to submit a quarterly report to the FCA on which firms they are dealing with so the broker needs to be ready to supply information to the lender on demand.
He said: “This FCA requirement will shift intermediary regulation from the regulator to the lender.
“Be under no illusions, if you are not making the grade – failing to comply with lender metrics and not remaining vigilant to fraud you will be struck of lender panels. The old attitude of “I’ll do it my way” has to go – it’s their way or no way.”