Frank Eve is managing director of Frank Eve Consulting
The FSA has now issued their long expected MMR Consultation Paper 11/31 which outlines the way that the FSA wants new regulation in the mortgage industry to go.
It confirms earlier papers including that all those who advise on mortgages will have to become Approved Persons by 2013 and goes on to lay out their entire package of proposals.
It wants feedback on these by 30th March so now is the time to look at how these proposals will affect your business and think about how you should respond.
In the distribution proposals the FSA has suggested removing any specific regulatory requirement on intermediaries to assess affordability. Instead intermediaries will have a general requirement to ensure consumers meet the lender’s known eligibility criteria.
It is also proposing to remove the non-advised sales route and make advice mandatory in all sales, a move which will require lenders to invest in qualifying all their direct sales and branch teams. On the face of it this looks like good news for intermediaries, but if lenders are taking on responsibility for functions they used to rely on intermediaries to undertake does it negate some of the reasons why lenders like to use intermediaries? I am not saying that they will not continue to support intermediaries but they may become more selective.
The FSA feels that vulnerable consumers should always be given advice – for example, equity release, sale and rent back, right-to-buy and the higher-risk consumer types, such as those where the main purpose of raising funds to consolidate debt (most remortgages have some debt consolidation).
This may therefore become the major areas of opportunity for intermediaries but because of sensitivities in dealing with “vulnerable” groups I suspect we’ll see greater monitoring by lenders of their intermediary distribution. It’s obvious that new regulation will require higher standards and ongoing proof of competency will become of increasing importance for advisers.
These proposals will change the face of intermediary distribution and all intermediaries need to think about how they will be affected and have their say. TCFInfo has produced some easy-to-read one page summaries on their key proposals that will most affect mortgage intermediaries.
Later this month it will start a series of questionnaires to give intermediaries the opportunity to give direct feedback to the FSA on their proposals. This will be your opportunity to help shape the mortgage industry of the future so make sure you are registered with TCFInfo to join the debate and have your say.