Bill Warren, associate director of the Regulatory Alliance of Mortgage Packagers, believed that while the Financial Services Authority’s (FSA) consultation paper ‘Organisational Systems And Controls – Extending The Common Platform’ was meant as a regulatory tidy up, the section on outsourcing could potentially impinge on the independent status of firms.
Warren believed that the trend of lenders dealing with a restricted number of firms, especially in the packaging arena, could be accelerated by the paper as organisations would have to place greater scrutiny on who they do business with.
He said: “The paper refocuses management controls and responsibilities to all senior management and underpins principles-based regulation. However, section six – outsourcing – has some potentially far-reaching requirements. It requires that when a firm outsources, it must retain responsibility. Therefore, lender/packager relationships, or other arrangements like satellite packager/packager will be scrutinised.
“This increases the likelihood of lenders reducing the number of packagers they are dealing with – something which is already happening – and you could argue is another example of the FSA driving brokers towards networks.”
With the consultation process now closed, the Association of Mortgage Intermediaries (AMI) said its response to the paper was centred around stopping the FSA introducing any changes on 1 October 2008 as currently proposed to prevent brokers suffering regulatory overload.
Richard Farr, director of AMI, said: “A few things need to be made clearer so that we see the wood through the trees, so to speak, but it seems to be about regulatory purity more than anything else. If the changes go ahead, we have called for 12 months bedding-in time as this would be introduced in October, slap bang in the middle of when everyone is trying to focus on ‘Treating Customers Fairly’.”
Robin Gordon-Walker, spokesperson for the FSA, said the regulator did not want to be drawn on market implications but said: “The proposals are not intended to change the basic thinking on outsourcing and isn’t designed to encourage or discourage outsourcing. This is an example of where guidance is being changed into a rule, which sometimes happens.”
