Questions from Hell


Now is the time to stand up and make your MP’s listen to common sense before it is too late for the mortgage market


We have had the by


Bill Warren, managing director, Bill Warren Compliance LLP


often in the challenging financial services world we operate in, it is very difficult not to repeat yourself when discussing what is happening in the market place in which you operate, especially in the current environment. the recent high profile and increasing public focus on the mortgage arena has remained connected to the very serious potential impact of the mortgage market review.


Q A


affordability and ‘product type’ discussions for some time now and it appears they are rapidly moving towards a conclusion. the next mmr segment to come under the spotlight was the FSa’s views on how distribution should work in their eyes. Sadly it seems few politicians, if any, have a real grasp of the mortgage market, its decisive and divisive impact on the struggling property market. the coalition government seems to have abdicated its responsibility for creating or driving, or at least directing, the uK’s housing policy and handed that mantle


The individual authorisation of mortgage compliance ‘supervisors’ and individual


advisers are not far away. I have read that sole traders and smaller limited companies need to act quickly as they may have greater difficulty obtaining FSA approval. Is this true and why?


Yes it is true that these categories of advisers and firms need to act quickly to avoid any delays in obtaining authorisation from the FSA. In simple terms the advice from the FSA is that sole traders and those limited companies with a single director need to register with an umbrella company in November-December 2010 to be able to submit CRB forms to the umbrella bodies in time to obtain a response. Being able to submit a recent CRB check report, no more than two months old as part of the application requirements to obtain the CF31 approved person approval is the driver for this fairly urgent action. All those applying for CF10 and CF31 approved person status must have the CRB report available with their application. The process is further complicated by the need if applying to disclosure in Scotland, for an England and Wales report also to meet the FSA requirements fully.


Q A


to the FSa via the Bank of england. this is the same organisation


who they have decided to replace and some would say is determined to get its own back as its end gets closer. it is difficult to decide if the politicians are listening to the FSa hierarchy too closely or giving them sufficient rope to hang themselves. Whichever it may be the FSa is certainly seeking to leave its mark on the financial services industry and, in particular, firms who have and still are providing the majority of their income. no one denies the need for


change at one level and severe measures to sort out the various


We are a firm with nine advisers providing mortgage and general insurance advice. We have been following the FSAs’ RDR announcements and trying to relate them to our business to ensure we are compliant now and going forward. We are slightly confused by the FSA’s announcement that general insurance commission must be disclosed fully. Can you clarify what must be disclosed and how?


There is one small point you may have missed in that the disclosure of commission the FSA has been referring to in its ‘clarification of the position’ communications actually relate to those situations where investment advice is being given at the same time or has been relative to the arrangement of the protection insurance involved. Obviously it is very important to be transparent with clients and reflective of TCF but this rule does not apply to you from how you describe yourselves.


Q 24 mortgage introducer NOVEMBER 2010


During the numerous discussions and debate about the availability of higher LTV


loans, in recent months, many industry commentators have asked: Why can’t lenders return to using mortgage indemnity guarantees (MIGs) in relation to the higher LTVs the


problems at another, but the lack of real understanding of the mortgage market displayed by some at the FSa since ‘mortgage day’ in 2004 seems to live on. continual improvement has always been the real mark of a successful firm or individual as we all know, but destruction after the offenders have departed seems uninformed to say the least. now is the time like never before for industry individuals to stand up and shout at their members of parliament to make them listen to common sense before objective advice from qualified and experienced mortgage brokers, is returned to the 60s and 70s.


consumers have become used to expecting? Why are the lenders and the regulator seemingly so against this suggestion?


A


Having worked with MIGs for several years I can easily understand their attraction or answer to the current shortage of higher LTVs. That said I can only speculate why the lenders and the regulator are not keen. One major challenge for lenders would be to find insurers prepared to offer them a MIG facility without substantial changes to the underwriting requirements placed on the lenders in addition to their actual mortgage underwriting, when agreeing a MIG. The volumes enabling risk spread would be difficult to achieve quickly, the result being high premiums for borrowers something the adviser/lender would need to consider in the affordability assessments. I believe it is the FSA’s view that MIGs would need to be ‘advised’ upon as part of the regulatory review thus making the practical application and commercial attractiveness diminish. There are other reasons also no doubt that make this less likely to happen despite the simplicity of the basic facility.


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