hority published its third and final paper


28. But what does it mean to you? month: What do you think of the latest FSA proposals in CP10/28?


The latest regulation proposed by the FSA requires that those selling mortgages ensure that each one sold is ‘appropriate’ for the customer’s needs and circumstances, therefore clarifying the role of the mortgage seller (both intermediary and branch based). This is eminently sensible, however consumers need to understand that when they buy from someone who offers only a single or limited provider range then the appropriateness of the mortgage cannot be as effectively identified as someone selecting from the whole of market. As hinted at by Sheila Nicoll, FSA director of conduct policy,


at November’s Mortgage Business Expo, other changes in the paper include replacing the obligation to issue an Initial Disclosure Document to the customer with requirements to clearly and prominently disclose key information about how the intermediary will be paid and the service they offer.It is staggering to think that this obligation is not already in place. The FSA is also proposing to change the trigger points for


providing the Key Facts Illustration to minimise information overload on consumers and reduce burdens on firms and will introduce a requirement for all individuals who sell mortgages to hold a relevant mortgage qualification ensuring appropriate professional standards across all sales. I fail to see how the provision of a KFI could be deemed as


information overload. It is the simplicity and uniformity of this document which makes it so effective. In fact, other divisions of the financial services industry could learn from the effectiveness of this approach. The paper also proposes to replace the existing labels used


to describe the firm’s service with the Retail Distribution Review’s ‘independent’ and ‘restricted’ labels. This is a sensible move and aligns the mortgage industry with the rest of the industry but does need to be policed effectively.


I totally agree with a


lot of the FSA’s statements regarding this paper - consumers need to be given all the options including arranging a mortgage themselves or getting regulated advice but they must be able to understand the clear distinctions between the two in terms of their regulated protection.


Peter Wright, director, CBK Colchester


As far as we can ascertain there is very little to concern brokers. Most of the changes seem to be common sense – in fact the most important issue here as I see it is for these changes to be enshrined into the rule book at the earliest opportunity.


The market has been hamstrung by fear for most of 2010 as lenders and brokers second guess what outcome the MMR would bring.


I do however believe that the tone of the FSA is anti- intermediary – for example one of the general observations I note is that the paper highlights that the UK is the only EU market where brokers are responsible for over 50% of mortgages written.


Reading between the lines I think highlighting this means it is viewed as an imbalance. Our view is that the FSA would like a market where there were a few supertanker brokers and lenders with direct access. Other concerns are the lack of acknowledgment that self employed people need special provisions regarding proof of income. Using a self-employed set of accounts to calculate borrowing power could be unfair. Accounts are produced solely to calculate one’s tax liability. Therefore accounts are full of allowances and tax


treatments that legally suppress the level of profits for the purpose of calculating tax. These allowances are paper reductions only, and do not affect pounds, shillings and pence. You could easily have somebody who earns £100k, and after depreciation and amortisation declares £75k. Under current practice, he or she could only borrow based on £75k not £100k.


Next is the lack of action on dual pricing. On moral


grounds how can it be right for a lender to get two applications through the door – one from a broker and one via a branch? They process two them both but the broker’s customer has to pay 0.8% more. Under TCF


Chris Gardner director, Obligo


should the lender not be duty bound


to call the borrower and tell them to go direct?


sense. Do you want to be a part of the next Bigger Issue? Email nia@thepublishinggroup.co.uk MoRtgAge intRoduCeR DECEMBER 2010 19


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