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Questions from Hell | 11
The bad news from Lloyds Banking Group
that its C&G branches are to close brings
closer the end of mortgage lenders that
seemed to have the customer at the forefront
of their business and had been able to sustain
a reputation for quality. It was not so long
ago that C&G led the mortgage industry and
were envied by their competitors. Lloyds
Banking Group may regret their decision not
to axe other brands whose history is less
credible.
Perhaps the biggest impact on the
intermediary industry in recent weeks is yet
to be fully debated and the implications fully
understood. The public concerns expressed
by the FSA Consumer Panel relating to the
FSA’s enforcement policy and approach to
orphaned broker clients could have a
huge impact on lenders and intermediaries. process
Watch this space over the next few weeks. allowed the FSA
to persuade firms to
Question: The arrival of regulation of the bring in technical
Sale and Rent Back business has generated assistance at an earlier
apathy in some intermediary firms and stage to help a firm
genuine enthusiasm in others it seems. Is it address possible
true though that those private individuals shortcomings identified by
who only perhaps purchase one or two the FSA. This would protect clients at a
properties a year can continue to carry on much earlier stage rather than perhaps
unregulated? Surely this is not fair. not at all if the firm can’t pay fines
and closes its business for example,
Answer: Yes the Interim regulations do with no action then being taken by
permit those who only occasionally purchase the FSA as no-one can pay.
for sale and rent back to remain unregulated.
The FSA apply the business test to these Question: I have read that a new trade
situations, so if the individual or firm do not body has been established for equity
undertake sale and rent back as part of their release advising firms and
core business they fail the business test. individuals. Is this something to prevent the
However, the FSA will normally apply a AMI is involved in and explosion of easy
‘number of transactions’ to such situations. I where can I get details? credit that they believe
believe, although I have not seen evidence to led to the ‘Credit Crunch’.
support this, that in the sale and rent back Answer: Yes a new I also happen to believe a
market more than two or three transactions trade body named the Independent Equity few other things
becomes ‘by way of business’. This is a strange Release Adviser Alliance has been established contributed to the mess, however there you
scenario though given that the OFT’s report since 1st July. It is the brainchild of Anthony go. Anyway, there does seem to be a genuine
into the sale and rent back market threw up a Harris, an IFA from Oak Financial (SW) Ltd appetite within the FSA to prevent
number of abuses, often by these armchair based in Taunton in Somerset. Information unaffordable credit fuelling more consumer
investors as they have become known. relating to the aims, client charter and hardship and problems for lenders. If the
membership can be found on their website. ideas you state are implemented it might be
Question: Do you believe that the increased AMI is not involved in it, other than good for lenders as it will provide an easy life
size of fines proposed by the enforcement supporting the launch of an organisation with no real competition; this is not so good
department of the FSA in the intermediary seeking to achieve excellence in the client for brokers and the major loser continues to
market will do any good? advice arena. be the consumers. This is something which I
am sure AMI is aware of and no doubt will be
Answer: As has been stated many times by Question: I have noticed various comments doing something about. An industry solution
important players in the mortgage from the FSA hierarchy in particular about would be much more preferable than
intermediary market such as AMI, the mortgage affordability and its desire to regulation that would take the country’s
removal of seriously non-compliant and regulate just what individuals can borrow, mortgage borrowers back 30 years.
fraudulent intermediaries helps to repair the ban self-certification cases and how this will
reputation of brokers. That said I personally be addressed in their mortgage review. Is this
believe that larger fines will act as a deterrent not a violation of the individual’s human You can contact Bill with your regulatory
as will the FSA’s recent decision announced rights, i.e., no right of choice? questions by emailing:
only recently to apply for a bankruptcy order bill@billwarrencompliance.co.uk
against a broker who failed to pay the fines Answer: It is true that the FSA, and the Bill Warren is managing director of
applied. I do wish however that the FSA Government as you will have read, are eager Bill Warren Compliance LLP
www.mortgageintroducer.com September 2009 Mortgage Introducer
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