Credit Collections and Risk

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FCA consultation paper on mortgage advice is ‘deceitful’

The recent FCA Consultation Paper CP19/17,

‘Consultation on mortgage

advice and selling standards’, has been described as “one of the most deceitful documents I have seen from the regulator in some time” by the Association of Mortgage Intermediaries (AMI). Speaking at FSE Manchester, Robert

Sinclair, chief executive of the AMI, suggested that the FCA’s apparent u-turn to make “execution-only business easier” was “dangerous”. He argued that the FCA was now trying

to row back on the rules introduced as part of the Mortgage Market Review (MMR) which were designed to “make execution-only difficult... and that lenders had to sign all this off by board committee”. “To say now, because they have an

unfortunate lapse of corporate memory, that this is not what they meant is untrue,” he said.

“They meant it and there was a good

reason for doing it.” Mr Sinclair suggested that part of the

reason for the attempt to make execution- only business easier to write is because it accounts for in excess of 30% of all mortgage business. He argued that because the market is in a different place to what has been intended post-MMR, the FCA’s consultation

FCA compliance survey to assess progress

As the credit, collections, and enforcement industry works to push even harder for strict compliance, a new piece of research will assess where creditors and collectors feel that they are, and whether the industry believes that it has the right tools for the job. The research, which will be run by

CCRMagazine and TriLine GRC, will ask crucial questions such as: what are the key regulatory compliance supervision challenges facing firms, how do firms currently manage and evidence FCA SYSC compliance and risk management governance controls, and whether firms are already in the process of implementing the FCA requirements under the SMCR. Stephen Kiely, editor of CCRMagazine,

said: “It is no secret that compliance is at the heart of everything that the industry

June 2019

does, it is a huge concern, which is why this month’s edition of CCR2 is covering this subject. “But the practical reality is that ever more

regulations are being placed on the industry so creditors and collectors will need to continue to adapt and evidence that they have complied in an appropriate way. “This is an important piece of work,

which we are proud to be collaborating with TriLine GRC on, and I hope that readers will want to take part in the survey.” l To fill out the short survey, please go to www.CCRMagazine.com.

www.CCRMagazine.com

paper is “an attempt to legitimise what has been done as opposed to actually going back and sorting the problem”. “This advice change is going to be difficult

because they want to change affordability as part of this process,” said Mr Sinclair. “They want to make it easier to do execution-only and they want to legitimise it so that lenders can offer a product on execution-only which is cheaper than on an advised rate. I think that is dangerous.” He also argued that a focus on price would

not help mortgage customers who have more complex needs and where product criteria such as ERCs was not widely understood. He went on to say that the consultation

paper could deliver some fundamental market changes: “The view is that purchase, in its various guises, and additional borrowing will stay advised but there are definite moves to take remortgage borrowing into a different space and make it a low-cost utility.” He went on to say that part of the problem

was that the architects of the Mortgages Market Study and the consultation paper were approaching the issues having dealt with “a benign market for the last 10 years where nothing has gone wrong”. He said: “When we hit the next crash, as

there has to be, all of this will go to hell in a handcart... if this happens. So I will be fighting quite hard to make sure that none of this happens. However, unless the other lender trade bodies fall behind us on this I think it will be hard to push back against all of it.”

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