Questions from Hell
Amended rules and regulations for approved persons, financial promotion and website protection
We should be bombarding
by Bill Warren, managing director, Bill Warren Compliance LLP
Since calling for the politicians to get involved and for the government to get a grip on the housing and mortgage market implications of the FSa’s mortgage market review (mmr)
some
staggering progress has been made. Parliament has debated the rdr with the mmr getting dragged into the debate and into the public arena. Should we continue to worry and harass our mPs? For sure we should.
Q
downing Street with more letters and emails continually spelling out the seriousness of the situation not just for the mortgage intermediary profession but for uK plc and the government. if we don’t do it now we can’t complain later if the FSa gets its way. the important point is that we mustn’t let the parliamentary debate be the last major discussion - more understanding is needed by government. there have been several
positives in recent weeks with potential improvements for many consumers and intermediaries, however we need the momentum to
There has been much publicity recently about the new rules and requirements for
approved persons, both the enhanced corporate governance requirements and the now postponed home finance new approved persons CF10 and CF 31s. We are a firm with two non-executive directors (CF2) and a small senior management team, most of whom hold more than one approval as an approved person. What are the main changes, why are they being implemented and is the commencement date set in stone now?
A
Over the last three years in particular the FSA has frequently expressed frustration
and concerns that firms were not being managed and controlled as robustly as it would like. The current rules have sometimes prevented the FSA taking the action it wished against those ‘directing’ the businesses, as it was often not as clear as it should have been who was responsible for what. This, set alongside the ‘Walker report’ into
corporate governance, has resulted in the Governing functions CF1 and CF2 being ‘decreased in scope’ and new functions being introduced. Briefly this means that there are specific approvals required for specific board
continue. the recent cmL conference appeared a little more upbeat so let’s hope lenders are slowly easing the reins and, despite the mmr, can increase and improve lending criteria and volumes so that 2011 becomes more robust and successful than 2010. this is usually the time
of year when organisations and individuals review and appraise results and opportunities so let’s hope we can all benefit from these important exercises, which now also include aiFa, ami and the aFB under their new leader. Let’s also optimistically hope that the FSa reviews some of its processes to seek
roles. For example, the chairman will need to be approved and be designated CF2a, the senior independent directors CF2b, as will the chairmen of risk, audit and remuneration committees. There is also a new category CF00 for a parent entity significant influence function role. Firms’ systems and controls functions also
change with the addition and separation of the Internal Audit Function CF15, who will not be able to hold any other control functions; the finance functions becomes CF13 and the risk function CF14. The FSA recognises that many medium to
smaller firms will not have the resources, human or financial, to implement these new requirements fully and will agree with firms individually how to go forward. The over-riding requirement for effective management and controls to increase consumer protection even further makes the decision to postpone the home finance changes for new CF10 and CF31approvals even more strange.
Q 22 mortgage introducer FEBRUARY 2011
Can you clarify something for me in relation to approving financial promotions?
improvements in content and speed, for example in the permissions function. the
very recent
confirmation by the FSa that it will take no further action following the review of rBS nor publish its findings has raised questions for many about what is really in the public interest. With the substantial time lapse since the difficulties experienced by rBS it could be argued that publishing information now would actually trigger more problems. that said uK plc has invested heavily in the banks especially rBS so perhaps should know why they needed to do so in more detail.
If a solicitor has provided legal advice in relation to a proposed financial promotion does that mean the financial promotion is deemed to be approved?
A Q
A
No they have provided legal advice only and therefore the promotion still needs
to be approved by a regulated firm.
If a non-FSA authorised firm shows a product on a website for example and as a result introduces a consumer to a regulated firm, does the firm receiving the introduction have any protection in relation to the content of the website?
An interesting question which perhaps raises as many questions as it seeks to
answer. Other than due care and diligence in relation to the source, I believe it may be possible to claim protection under the Business Protection from Misleading Marketing Regulations 2008 which came into effect in May 2008. Much, I suspect, will depend upon what business the firm whose website was used is involved in and therefore what regulations they may or may not be subject to.
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