Mortgage Board Keeps Up The Pressure

Amanda Jarvis

September 19, 2002

Following the announcement in December 2001 that mortgage advice and the authorisation and regulation of mortgage intermediaries will be subject to statutory regulation from mid-2004, the Mortgage Board has responded positively to the Treasury’s request to continue to provide effective industry regulation and consumer protection throughout the transition period. The Mortgage Board has continued to raise industry standards and enhance consumer protection.

The Annual Report highlights that over the past year, the Mortgage Board has:

· Ensured that the 31 December 2002 deadline for advisers to hold an accredited professional mortgage qualification remains on target. Over 37,000 advisers have already passed one of the accredited examinations.

· Implemented the requirement for all new firms to meet the Mortgage Board’s Fitness and Propriety entry requirements. In 2002 this has extended to existing firms on a phased risk-assessed basis. Since the higher standards were introduced, only 48% of the firms seeking application details have subsequently applied for registration.

· Continued to educate firms about Fitness and Competence and other compliance obligations by holding another 16 roadshow, attended by representatives from over 1,000 firms, and upgrading its website. The website now receives some one million hits per month.

· Worked closely with the Treasury, FSA, DTI, OFT and consumer bodies to ensure that consumer protection is maintained during the transition to statutory regulation.

· Supported the extension of the Financial Ombudsman Service’s Voluntary Jurisdiction to include mortgage intermediary firms.

Additionally, to reduce the risk of consumer detriment the Mortgage Board has, over the last 2 years:

· De-registered over 200 firms for failing to meet its requirement to hold adequate Professional Indemnity Insurance. A further 300 firms have withdrawn from registration when compliance monitoring activity revealed unsatisfactory practices.

· Overseen the rules and processes whereby over 200 complaint cases have been considered under the Mortgage Code Arbitration Scheme. In 45% of these cases, adjudications were made in favour of the consumer, with the largest award this year totalling £66,300 and resulting from the provision of poor advice.

Colin Harris, Chairman of the Mortgage Board, says:

“We support the Government’s clear direction on the future regulation of the mortgage industry.

“Until 2004, when statutory regulation is expected to be in place, and with the continued strong support of the industry, we will continue to improve industry standards and to ensure mortgage borrowers continue to receive adequate protection. It is crucial that consumers are not left more exposed as a result of the changes and we will continue to work with the Treasury, FSA and other relevant bodies to ensure a seamless transition to an effective new statutory regime.

“Key to this is ensuring that all advisers meet our Training and Competence requirements by the end of 2002. CP146 makes it clear that the FSA will be looking for ‘qualified’ advisers in the future, and the huge majority of the industry welcome this demonstration of professionalism”.

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