News Review


Brokers slammed as higher risk by FSA By Sarah Davidson


details on the Financial Services authority’s proposals for a register of approved persons revealed that mortgage brokers will subject to tighter controls than iFas when seeking approval from the regulator. a spokeswoman for the


FSa said the difference in treatment of iFas and brokers reflected “the concerns that we have about mortgage fraud in the broker market”, adding: “With iFas there isn’t the same level of fraud.” iFas are required to disclose


any criminal convictions to the FSa, but mortgage brokers will have to supply a criminal records check or a disclosure Scotland to the regulator. Failure to supply the relevant documentation could prevent brokers from being approved. “We will not automatically


refuse applications for approval from individuals who have criminal convictions,” the FSa said “but these issues do raise serious concerns and they will need to be taken into account by firms and by us in making a decision about the approval of that individual.” robert Sinclair, director of


the association of mortgage intermediaries, said the trade body had “yet to be convinced” of why this discrepancy existed, suggesting that as iFas hold client money, they should be subject to the same level of stringency as mortgage brokers. the FSa announced in


late June that the register of approved persons will extend across the whole market, applying to everyone involved in home-finance. the timeframe of the application process is initially confirmed for early next year,


with the FSa expecting to accept applications from the 31st march 2011. the total one-off cost associated with extending the aP regime to cover the relevant activities will be £4m to £5.5m for the FSa, and £9.4m to £13.8m for the industry. and the regulator estimates


that 20,000 advisers and arrangers will be affected, and the number of lender staff will be around 11,500. mike Fitzgerald, sales director of Brentchase Financial Services, called the FSa proposal “churlish”. “Having one rule for


brokers and another for iFas could cause problems. What if you’ve got a mortgage broker with a criminal record who has got the FPc 1, 2 and 3 and he wants to avoid submitting his full criminal record, would he switch to become an iFa?


Mutual sector may deviate from CML By Sarah Davidson


in a post credit crunch world where trade bodies play vital roles in lobbying government and representing banks and building societies in the wid- er economy, a split between banks and building societies could be on the cards. Steven marks, intermedi-


ary services executive at new- castle building society, said that newcastle had recently withdrawn as a member of the council of mortgage Lenders, adding that it was just one of a number of mutuals deciding to opt for sole Building Soci- ety association membership instead.


“a number of mutuals have


given up cmL membership and are staying with just the BSa,” he said. “there are extremely distinct issues for mutuals in the current market and we feel it’s getting harder for the cmL to represent both the views of bank lenders and building societies. “We’ve seen recently a bit


more of a divergence between retail banks and mutuals – for one thing the regulation each institution must adhere to is different.” in march this year the Fi-


nancial Services authority released PS10/5 “a specialist sourcebook for building societies” which offers


4 mortgage introducer JULY 2010


mutuals “enhanced supervi- sory guidance on financial and credit risk management”. this guidance must be implement- ed by mutuals over the course of 2010. “People are still trying to


absorb the full implications of this guidance but there are some concerns that it may dis- advantage mutuals in relation to banks,” said marks. “new- castle feels that in respect of this it is more appropriate to stick with the BSa now.” an important distinction


between the cmL and BSa is that the cmL only focuses on mortgage lending, while the BSa covers both lending and savings, which marks says


is more appropriate for the majority of mutuals. Paul Broadhead, director of mortgage policy at the BSa, said there was a general accep- tance that building societies have a distinctive message they need to portray at the moment. “as to the decision of indi-


vidual societies deciding to go for just the BSa or cmL, it’s really down to those insti- tutions themselves,” he went on to say, adding: “But i don’t see it as being an either/or situation.” today, the cmL said, mutu-


als help sustain diversity and choice within a market where both these commodities have been squeezed.


“and you’ve got brokers


who have been iFas, and iFas who have been brokers – what about them?” Fitzgerald said the situation


was similar to the difference between football and rugby and use of cameras. “in rugby, you know if


there’s been a try immediately – there’s about ten cameras on the ball. in football, as we all know, it’s all down to the referee, even though we can prove the ball’s over the line using cameras. We’re all left wanting to wring the referee’s neck.” “the register should


be there to give the client protection and clarity and the same rules should apply to anyone dealing with client money,” he went on to say. “it’s as simple as that. in fact it’s a no brainer. Having differences will just cause more confusion for consumers.


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