AMI is pleased to see that large networks and intermediary firms who participated in the study had robust processes in place. Smaller networks and intermediary firms do have work to do though to improve their advice and record keeping processes.
Rob Griffiths, associate director at AMI, commented: “AMI is keen to help ensure that consumers are provided with good quality advice on mortgages, delivered by advisers who are competent, professionally qualified, and adequately supervised. We are therefore concerned about the findings of the FSA’s thematic work on the quality of mortgage advice.
“It is clear that some mortgage intermediary firms have work to do to meet the standards required, particularly in the areas of adviser competence and supervision, record keeping, and monitoring procedures.
“At the onset of statutory regulation, many mortgage intermediaries particularly smaller firms, did not have experience of compliance with a regime similar to that of the FSA, and have therefore had a steep learning curve to climb in meeting the requirements. Whilst mortgage intermediary firms are responsible for meeting the rules, the regulator also has a role to play in helping firms to understand how to fulfil their regulatory responsibilities, and in doing so, providing an effective regulatory regime for consumers.”
AMI’s role in supporting mortgage intermediaries
Since its inception, AMI has worked to provide support to its members in meeting their regulatory obligations, both through the publication of its factsheets and good practice guides, communications at its roadshows and events, and through the provision of its technical advice helpline which deals with hundreds of queries from AMI members each year.
AMI will continue to help its members by providing regulatory support, whilst actively campaigning to represent their interests. AMI’s 2007 events schedule includes a joint programme of work with professional bodies for individual expertise, and will explore ways to help improve corporate standards.
The regulator’s role
Griffiths added: “For regulation to deliver effective protection for consumers, businesses must be able to implement the regime without disproportionate costs or disruption to the day-to-day business of the firm in serving its customers.
“Nearly 30 per cent of mortgage intermediary firms are sole traders and a further 10 per cent are partnerships. Small firms, in particular sole traders and those with a small number of employees, will not generally have specialised, experienced, compliance staff and will therefore require greater help and support with the interpretation and application of the FSA rules. The Financial Services Practitioner Panel’s latest survey of regulated firms showed an increase in the number of smaller retail firms who were dissatisfied with their relationship with FSA. FSA has work to do in reviewing how it allocates resources and considering ways in which it can re-engage with smaller intermediary firms.
“AMI is very supportive of the work that the FSA, in particular Stephen Bland and his team, has already carried out to help small firms in this respect. However, the results of this study demonstrate that further work is needed. This need will intensify with the move to a more principles-based regulatory regime.
“Many larger mortgage intermediary firms feel that FSA resources are not evenly balanced between small and large intermediary firms: they are concerned that many smaller firms are below the FSA’s eye-level and therefore beyond the reaches of regulatory scrutiny on a day to day basis. Whilst this could simply be a matter of communication between the FSA and the mortgage intermediary community, the results of this study could indicate the need for the FSA’s to increase its visibility amongst small firms and send out a clear message to the industry that no firm is below its radar.
“AMI would be pleased to work with the FSA to help the regulator provide mortgage intermediary firms with practical ideas on ways to meet their regulatory requirements.”
Later this week AMI will publish a factsheet on implementing a Training & Competence (T&C) scheme in a mortgage intermediary firm. The objective of this factsheet is to provide straightforward steps for mortgage intermediaries to design, implement and monitor a T&C scheme for their mortgage advisers. Members are advised to use this factsheet to review current T&C arrangements.
