The Financial Services Authority (FSA) has been clamping down more vigorously in recent months, with Rainbow Homeloans Limited (RHL) recently fined £35,000 for inadequate compliance practices.
Now intermediaries have been warned they must take an active interest in their firm’s compliance procedures, rather than simply relying on an outside consultancy.
Tony Jones, managing director of Pink Home Loans, said: “A lot of brokers are going out and getting the cheapest compliance officer, often a consultant, who works for a number of firms. However, by putting their faith in someone else, they are taking a hell of a risk because if they miss something, it will be the firm who is responsible and not the consultant.”
The cost of compliance has been a cause for concern for many smaller brokerages since ‘Mortgage-Day’ and it has taken time for compliance to be ingrained in the process.
However, the FSA has reiterated compliance is a key consideration that brokers must take into account, and not leave for others to implement.
Jones continued: “It is very difficult to keep up-to-date with compliance and it takes a lot of resources. It is important for brokers to ask themselves who they are putting their faith in and establish the validity of their advice.”
Abi Jones, spokesperson for the FSA, commented: “The ultimate responsibility of adhering to our rules and regulations lies with the firm and the senior management. They are responsible for ‘Treating Customers Fairly’ (TCF) and ensuring the controls are in place, not anyone else. When using compliance consultants, brokerages must err on the side of caution and make sure they have overall control as consultancies are not an excuse if something does go wrong.”
