Questions from hell
The Election should have focussed on lending issues
Politicians should do more to force lenders to lend again – especially remortgages
by
Bill Warren,
managing director, Bill Warren Compliance LLP
Were you engrossed or bored with the various statements and so-say promises as we headed towards polling day? undoubtedly and, as ray Boulger pointed out in his excellent cover feature for Mortgage Introducer last month, this was one of the most important general elections the mortgage industry has seen for 40 years. as has been said many
Q A
times elsewhere it was also vitally important for the intermediary sector. While the issue of taking away the Financial Services authority’s powers or perhaps realigning them immediately comes to mind there are some more fundamental issues that we need all parties to provide reassurance on at the very least. these include, in my opinion, a commitment to society remaining a home- owning one or are we going to just drift into a rental driven short-term home residence environment? also, is there a real commitment to support the
I noticed recent reports stating that the FSA had issued more requests for Section 166
reports over the last year than ever before. Apart from the obvious fear of the FSA being shown up as failing to regulate effectively why do they seem to opt out of the work and make firms pay out large sums of money to third parties? Who is doing the work and gaining financially from it and are they mortgage qualified to do the work?
It’s certainly true that the FSA have ‘requested’ firms to pay for detailed
business reviews on a larger scale than ever before. With the quality of advice issue being so high profile whether via PPI or sub-prime mortgages it was inevitable that the volume would increase, as the FSA just do not have the resources and possibly numbers of qualified staff to undertake these detailed investigations. The firms the FSA recommend to firms are usually the large accountancy firms such as KPMG, PWC and the like who claim to have the qualified resources to undertake the work. What generally happens I believe is that the work is sub-contracted out by these firms at a lower rate presumably to individuals or firms who either are or have suitably CeMAP-qualified and experienced
16 mortgage introducer MAY 2010
mutual sector, traditionally the source of most home loans, or will they be forced to speed up the merger process and convert to plc one way or another and slowly disappear? While there has been some very encouraging news with new and more high-profile lenders coming either to or back to the market, one must ask, where is the political encouragement? the continuing bank
bonus bashing was good sound bite stuff but it was old news – what we should have has is more drive from politicians to encourage
people. Something I presume the FSA are aware of and comfortable with and I assume check up on, if only for its own credibility and fairness to the firms involved who are having to pay top rates to the KPMG and PWC’s firms involved.
Q A
We are a medium-sized mortgage and general insurance firm who are in the
process of moving from appointed representative status to directly authorised so that we can reduce the risks to the firm and our clients from being linked to a network and be in control of our own future. The recent FSA Consultation paper CP10/8 left us confused as to what we will need to do differently going forward. Could you explain please?
This paper was to clarify the position for pure protection sales by investment
advisers; you are not investment advisers as per your description in your question. This mainly relates to commission disclosure under the RDR where pure protection sales take place associated with investment advice and applies to a personal recommendation for pure protection or arranging the sale of pure protection. You are subject to the requirements within ICOBS.
Q
I don’t have sufficient information to answer the first part of your question; that is something only the FSA could answer in due course. I can’t really comment with certainty about how onerous or otherwise they are. However it is well known that Sale and Rent Back was and still is seen as being high risk for consumers, which is why regulation came about in the first place as is well known. The capital resources requirements under the final rules for SRB providers is £100k or 1% of tangible assets whichever is the greater and for SRB administrators £100k or 10% of annual income, again whichever is the greater. The FSA only want to approve quality firms with a strong financial position as is its normal approach and therefore some firms may struggle to meet these minimum requirements and will perhaps seek to introduce business to providers and administrators who can achieve these standards.
A
or force lenders to provide more funds, especially in the remortgage market. Perhaps i have missed the detail by not getting excited by the various points made by the politicians but with so many amended or new regulations emanating from the FSa it is critically important. With the rdr ruling the (trade) news pages currently and rightly so as it is so fundamental to the financial services industry, housing and mortgage issues have perhaps fallen away. Perhaps ami should be doing more currently to promote the survival of the mortgage intermediary.
It is rumoured that fewer Sale and Rent Back firms who hold Interim Authorisation
as providers and administrators are applying for Full Authorisation due to the severe capital resource requirements included in the rules for full SRB authorisation. Is this true and if so why are they so onerous?
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