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10 | Questions from Hell
Questions from hell
This month’s Questions from Hell tackles
all your mortgage and GI regulatory queries
courtesy of Bill Warren
A
s the mortgage industry battles Watch this space over the next few weeks. Question: I have read that a new trade body has
on to claw itself back towards a Question: The arrival of regulation of the Sale been established for equity release advising firms
sense of reality - or at least an and Rent Back business has generated apathy in and individuals. Is this something AMI is
acceptable flow of products some intermediary firms and genuine enthusiasm involved in and where can I get details?
and funds which consumers in others it seems. Is it true though that those Answer: Yes a new trade body named the
can believe actually exist - the private individuals who only perhaps purchase Independent Equity Release Adviser Alliance has
vultures continue to circle. one or two properties a year can continue to been established since 1st July. It is the brainchild
While there are signs on some days that a little life carry on unregulated? Surely this is not fair. of Anthony Harris, an IFA from Oak Financial
and sanity is returning to at least save more Answer: Yes the Interim regulations do permit (SW) Ltd based in Taunton in Somerset.
brokers - and even purchasers and existing those who only occasionally purchase for sale and Information relating to the aims, client charter
borrowers - from the brink of despair, each small rent back to remain unregulated. The FSA apply and membership can be found on their website.
portion of optimism is usually quickly followed the business test to these situations, so if the AMI is not involved in it, other than supporting
by a negative or a perception of such. individual or firm do not undertake sale and rent the launch of an organisation seeking to achieve
The combination of the Government, the back as part of their core business they fail the excellence in the client advice arena.
Governor of the Bank of England and other business test. However, the FSA will normally Question: I have noticed various comments from
influential figures seemingly fighting their corner apply a ‘number of transactions’ to such the FSA hierarchy in particular about mortgage
for more control over the banks in particular is a situations. I believe, although I have not seen affordability and its desire to regulate just what
sad indictment of how far we have sunk from evidence to support this, that in the sale and rent individuals can borrow, ban self-certification
being one of the most respected countries in the back market more than two or three transactions cases and how this will be addressed in their
world in the sphere of financial services and becomes ‘by way of business’. This is a strange mortgage review. Is this not a violation of the
controls. scenario though given that the OFT’s report into individual’s human rights, i.e., no right of choice?
The tripartite agreement seems to have the sale and rent back market threw up a number Answer: It is true that the FSA, and the
fragmented even more with blame for the ‘Credit of abuses, often by these armchair investors as Government as you will have read, are eager to
Crunch’ being passed around like the proverbial they have become known. prevent the explosion of easy credit that they
parcel. Perhaps those involved should step back Question: Do you believe that the increased size believe led to the ‘Credit Crunch’. I also happen
and consider what damage they are doing not just of fines proposed by the enforcement department to believe a few other things contributed to the
to their own credibility but more importantly to of the FSA in the intermediary market will do any mess, however there you go. Anyway, there does
the businesses and consumers they are supposed good? seem to be a genuine appetite within the FSA to
to protect and support. Answer: As has been stated many times by prevent unaffordable credit fuelling more
The bad news from Lloyds Banking Group that important players in the mortgage intermediary consumer hardship and problems for lenders. If
its C&G branches are to close brings closer the market such as AMI, the removal of seriously the ideas you state are implemented it might be
end of mortgage lenders that seemed to have the non-compliant and fraudulent intermediaries good for lenders as it will provide an easy life with
customer at the forefront of their business and helps to repair the reputation of brokers. That no real competition; this is not so good for
had been able to sustain a reputation for quality. said I personally believe that larger fines will act brokers and the major loser continues to be the
It was not so long ago that C&G led the mortgage as a deterrent as will the FSA’s recent decision consumers. This is something which I am sure
industry and were envied by their competitors. announced only recently to apply for a AMI is aware of and no doubt will be doing
Lloyds Banking Group may regret their decision bankruptcy order against a broker who failed to something about. An industry solution would be
not to axe other brands whose history is less pay the fines applied. I do wish however that the much more preferable than regulation that would
credible. FSA process allowed the FSA to persuade firms to take the country’s mortgage borrowers back 30
Perhaps the biggest impact on the intermediary bring in technical assistance at an earlier stage to years.
industry in recent weeks is yet to be fully debated help a firm address possible shortcomings
and the implications fully understood. The public identified by the FSA. This would protect clients
concerns expressed by the FSA Consumer Panel at a much earlier stage rather than perhaps not at You can contact Bill with your regulatory questions
relating to the FSA’s enforcement policy and all if the firm can’t pay fines and closes its by emailing: bill@billwarrencompliance.co.uk
approach to orphaned broker clients could have a business for example, with no action then being Bill Warren is managing director of
huge impact on lenders and intermediaries. taken by the FSA as no-one can pay. Bill Warren Compliance LLP
September 2009 Mortgage Introducer www.mortgageintroducer.com
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