MIp8-9_0210:MI 12 Jan 21/01/2010 17:12 Page 3
Questions from hell | 9
Protection
Question:
The Retail Distribution Review talks
It is thought by many that the
briefly about ICOBs and pure
protection but I am not sure what the
intention actually is as most protection
FSA will evolve into a much more
products sold under ICOBs is so low
risk. Can you explain what is being
consumer-orientated
proposed as this is an important part
of our business?
organisation with stronger
Answer:
There are two elements to which I think you
are referring relating to pure protection, one
powers to ensure that consumers
is commission disclosure and the other
adviser service labelling. Briefly it is being
considered that commission should be
are much ‘better’ protected than
disclosed in the same way as it is in relation to
the sale of investment products. The
suggestion being considered is that where
is currently the case
pure protection is being sold at the same time
as investment products full commission
disclosure should be present for both types of
surprise, having survived to this point. The
product. The FSA intends to issue a
Financial Services Bill
first point I would like to make is that the
consultation paper in Q1 2010 to address
MMR is not yet written in stone although
this. The adviser service labelling relates to
many have assumed what the FSA has
Question:
the intended new description of independent
proposed will happen. As has been well-
Will the new Financial Services Bill
advice alongside a new ‘label’ restricted
covered by the press, the FSA has been at
actually help anyone other than the
advice, the same as has been proposed within
pains to say nothing is final until the
Financial Services Authority; it doesn’t
the Mortgage Market Review. Again before
consultation process has been completed and
implementing the FSA intend issuing a
seem to be adviser friendly shall we
they have reviewed the feedback.
consultation paper probably in Q3 2010. The
The FSA has clearly stated several times that
say?
basic argument I suspect remains will the
they see an important future for
consumer gain from these new ‘adviser labels’
intermediaries in the mortgage advice process,
Answer:
or be confused as now?
if only for the fact that a high percentage of
To quote from the bill itself: ‘The Financial
the public have a very high level of trust in
Services Bill will enact a wide range of
Mortgage Market Review
intermediaries. The face-to-face contact is
proposals to ensure that the financial system
seen by the FSA to be vital and the fact a high
that emerges from the crisis is rebuilt on a
Question:
percentage of loans are still being arranged via
stronger and sounder footing, and is fairer
intermediaries supports this view. That said,
and works for consumers. Many of these
We are a medium-sized MGI firm
no-one is pretending it is easy. The first
proposals were set out in the ‘Reforming
struggling to survive like many others.
quarter of a calendar year is always tough but
financial markets’ paper issued by the
All we can see is more and more
there is a body of opinion that believes that,
government’.
lenders either leaving the market or
with more lenders on the horizon, life will
One of the big issues within the Bill is the
applying such harsh lending criteria as
slowly improve.
increased power to be given to the FSA to
The message, as mentioned previously, is to
intervene should consumer detriment become
to render themselves unable to
give the FSA considered feedback to convince
apparent within a product or service. This
lend. This is obviously the FSA’s fault
them that the intermediary has much to offer.
could be viewed two ways: it could stop
as they are applying so much pressure
The Association of Mortgage Intermediaries
innovation or ensure a level playing field
to lenders, as usual after the horse is far
(AMI) is certainly working hard to get the
exists. In general terms the Bill is aimed at
way in the distance. Does the FSA’s
message across to the FSA. The FSA has got
the regulatory parties at a high level; the big
its teeth into lenders, as you state, as they can
plus as I see it for intermediary firms is the
Mortgage Market Review really spell
now see that lenders were more responsible
intention to prevent drama of the type we
the end for intermediaries and who
for some of the past problems than had been
have experienced over the past two to three
can save them?
realised. This followed the ‘passing the buck’
years.
onto intermediaries by lenders ‘season’ in Qs 3
Answer:
and 4 2009.
There is no doubt that currently the number
of lenders and products available has been You can contact Bill with your regulatory questions by emailing: bill@billwarrencompliance.co.uk
shrinking again - some expected, others a Bill Warren is managing director of Bill Warren Compliance LLP
www.mortgageintroducer.com February 2010 Mortgage Introducer
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