An industry source told Mortgage Introducer the FSA had taken a tougher line with networks, while failing to apply the same standards to DA firms. The source stated when networks had problems with their appointed representatives (ARs) the FSA saw it as their fault, yet when DA firms failed regulatory rules, there is no suggestion of the FSA being at fault.
The source said: “The FSA has released reports showing an average 30 per cent market failure of DA brokers. Yet, it never seems to consider its supervision as the problem. If it was a network, it definitely would. The FSA needs to pick up more responsibility.”
The source questioned whether the FSA’s degree of supervision was adequate, due to scale of failure among DA firms and felt other firms were playing on an unlevel playing field. “It’s about time the FSA asked whether remote supervision is working.”
But Robin Gordon-Walker, spokesman for the FSA, denied any imbalance. He said: “The position of the principals and ARs was long established before the FSA was set-up and generally works well. Our requirements on networks are there to ensure ARs operate in a way that meets standards of ‘Treating Customers Fairly’ (TCF). The FSA relationship with DA firms is based on the Financial Services Market Act. We regulate and supervise firms in a proportionate way based on TCF and other principles.”
Bill Warren, director of Complete Mortgage and Loans Service, backed the FSA. “On the surface it looks like the FSA is giving networks a hard time. There is a lot more visible activity with mortgage networks, as they can be talked about in general terms rather than individual DA firms. But I think the discipline is more apparent than real.”
