Lynda Blackwell: "It’s a matter for lenders who they have on their panels and why."
The Financial Conduct Authority has hit back at lenders that kick brokers off their panels on the claim advisers are required by the regulator to hold certain permissions - specifically debt counselling.
Speaking at the Mortgage Business Expo in Leeds Lynda Blackwell, mortgage sector manager at the Financial Conduct Authority, dismissed the myth that the FCA requires brokers to have this permission.
She said: “It’s a matter for lenders who they have on their panels and why and a matter for brokers to decide what permissions you need.
“There have been instances reported to us where lenders have taken brokers off their panels because they didn't have a debt counselling permission - and the justification given is that it is an FCA requirement.
“It is not an FCA requirement. Whether someone needs a particular permission or not is down to the regulatory regime laid down by the government.”
Blackwell said the FCA issued guidance to help firms decide whether they needed the permission but that was guidance only and it was for firms to make their own decisions.
She said: “In relation to mortgage advisers, you're likely to be debt counselling where you advise your client to consolidate their consumer credit debts into a single, potentially more manageable single debt.
“If you go on to recommend a regulated mortgage contract as that single debt, then it's likely to be regulated mortgage advice and you wouldn't be debt counselling.
“The problem is that for it not to be debt counselling, you need to be going on to recommend a regulated mortgage contract and there might be situations where you have an initial fact finding discussion where the possibility of consolidating debts into a mortgage is discussed but for whatever reason doesn't proceed.”
Situations that are considered debt counselling include: where the broker advises the borrower to take a second charge but cannot offer advice on seconds and has to refer; or, where some debt is consolidated into a first charge mortgage but not all due to repayment of the remaining debt.
Blackwell warned that without a permission in debt counselling advisers in this situation were conducting unauthorised business.
She added: “It's not straightforward and I think there is a view that, if you are likely to be advising a customer about consolidating their debts, from a practical perspective, it may be sensible to have the permission. But as I said, it's a decision you have to make.”
