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three trade bodies are all concerned about how cost will be apportioned. Sinclair says there is a range of issues to be discussed and a lot of complexity. “Registered individuals will have significant effect on reducing fraud but it will create a high level of red tape and the worry is that those in the industry who are committed to being well behaved will still behave well, and fraudsters will find a way around the register. The positive will be that visibility may help show up patterns of advisers moving around more frequently but it will take a few years to build up enough information to reveal any meaningful patterns, though the application will look at a back dated history of the adviser. “The CML has been public in their
desire for intermediaries to be subject to a strict process of control and that the internal bank staff shouldn’t be subject to same regime because, they argue, the banks’ internal processes are sufficient. That is clearly not my view. The register is proposed to ensure and enshrine consumer confidence in the mortgage industry as a whole. The only way it’ll work is if everyone is on there.” Coogan defends the CML view however, saying: “We didn’t see in the FSA paper the evidence that people have gone into lenders, created the havoc for individual customers, or their employers and therefore had the need to be a directly regulated person. Banks have a whole variety of ways in which the FSA can intervene, from visits through to regular returns, through to higher expectations on training and competence budgets. There are a variety of other ways you can deal with an individual who goes into a lender and creates problems.” Sinclair disagrees. “The CML seems to be arguing that big banks don’t take advantage of consumers because they’re nice – that’s not a good message. But it ties into the view the CML takes that all intermediated mortgages should be on an advised basis while branch or telephone based channels can still do non-advised. That means the bank takes no responsibility
24 mortgAge introducer JULY 2010
“ I’M FIRMLY OF THE VIEW THAT WE LENDERS AND BROKERS ARE DIVIDED AT THE MOMENT AND AS SUCH WE WILL HAVE SOLUTIONS THAT ARE NOT NECESSARILY BEST FOR THE INDUSTRY
OR CONSUMER.”
for customer choice, rather than recommending a product.
“The CML thinks the level of mischief in the intermediary market means they should be on hook, but that there should be a different rule for branch-based advisers. I think that having these divides is not constructive. We need a more measured, consensus view, so we can deliver solutions to the FSA as opposed to them delivering solutions to us.”
Coalition spirit Sinclair, Coogan and Williams have committed to discussions to try to reach such a consensus.
“The intermediary and lender sectors
do need to work together,” says Coogan. “ There’s been a chequered history and some concerns expressed about control, whether it’s in the hands of the brokers or lenders. But actually control isn’t the issue for me because if we’re both on the Titanic, and we’re taking turns on the tiller, it doesn’t help missing the iceberg, because we’re still on the Titanic. “The issue for me is that we work together to have a better outcome for the market as a whole, and don’t fight each other over who’s driving the ship. Approved persons and availability of advice are two things worth talking about.”
The other area where AMI and the CML have had some interesting conversations and debate in their responses to the MMR, says Coogan, is on advice. The CML view is that if 91% of the intermediary sector is already advised, it is a small step to making advice the key differentiator between lenders and intermediaries. “There is an argument for making it a
requirement of advisers to give advice,” explains Coogan. “AMI, I think have said that it should be a requirement for everyone to give advice whether in a bank or an intermediary office. “From my perspective, a lender’s
product range may be simpler, the customer base may not require advice and the option of no advice in itself is not a bad option, for the right customers. The challenge is it not being used as an escape route for not having to be regulated as an adviser.” IMLA said it was central to the decision to write down guidelines for fairness and responsibility in a formal document, which will hash out problems such as this. Williams added: “We are trying to tease out the business to business components from the TCF elements so it can be made clearer. We want to make sure our written agreement can be a useable document, not something that simply goes on the shelf. “Ultimately a lot of what goes on between brokers and lenders is a commercial relationship and this is captured in the legal agreements between them. The IMLA/AMI/CML guidance will not seek to interfere with that. It will be aimed at setting out in simple terms who does what. It might then sit as a guide behind those agreements.”
Sinclair added: “I’m very firmly of the view that we lenders and brokers are divided at the moment and as such we will have solutions that are not necessarily best for the industry or consumer. The regulator will always want to impose cost and control risk, so we need a consensus to reduce the risk of that happening to avoid fallout on consumers.”
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