MIp6-7_1209:MI 12 Jan 24/11/2009 16:21 Page 3
Questions from hell | 7
Question: to seek guidance from a compliance firm or should it be necessary that the income is gen-
I read recently that the FSA were concerned individual via training or signing-off the pro- uine. My suggestion would be to use a budget
about the problems associated with stand- motions. planner if you don’t already now and expand
alone financial promotions. I am not really to clearly show the disposable income after
sure what they mean by stand-alone in this normal outgoings. The Home Buyer System
context as my firm finds producing and sign- Question: has a really good one, for example.
ing off financial promotions quite difficult as Our firm has always taken affordability seri-
we are too small to warrant employing a com- ously in advising our clients in line with the
pliance officer. existing MCOB rule requirements. What do Question:
we need to do differently following the The Mortgage Market Review states that all
Answer: Mortgage Market Review proposals that we compliance officers/managers within mort-
The FSA did issue an industry update, don’t do now? We always try to see payslips gage firms will become a controlled function.
Number 3, in late September on the subject of and/or P60s. We use a compliance consultant - will they
stand-alone compliance in financial promo- have to be approved by the FSA?
tions as you say. Their concern is to ensure Answer:
that firm’s financial promotions are fully The biggest difference will be that the afford- Answer:
compliant when actually published. The FSA ability test will be based upon the borrower’s Yes, the individual from your compliance firm
said that many firms were tending to use free disposable income. This is alongside the who carries out your work will have to be
financial promotions that did not contain requirement for lenders to assess affordability approved by the FSA as a controlled function
either all of the benefits or features of the also based on the consumer’s borrowing (CF) or an approved person as also described.
product being advertised or had omitted key capacity and on a repayment basis. So no They will have to meet and pass the FSA’s fit
health warnings. They were not delivering the interest-only cases can be processed unless and proper tests just as any other approved
clear, fair and not misleading messages they have passed the affordability test based person has to.
required and of course firms were then being on a repayment basis. The other key factor
accused of not treating their customers fairly. will be the plausibility of the information
Non-compliant financial promotions can be obtained, which is also where the intermedi-
very expensive mistakes, so it is often good ary can help the consumer and lender a great Bill Warren is Managing Director of Bill
practice if the firm doesn’t have the expertise deal by being able to obtain confirmation Warren Compliance LLP
www.mortgageintroducer.com December 2009 Mortgage Introducer
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