The warning comes as the FSA announced it has put three firms into enforcement for breaking its rules following a review of ‘higher risk’ small mortgage firms.
The FSA visited 51 small mortgage firms from across the country looking at selling practices and training and competence. The majority of firms visited were identified as ‘higher risk’ based on information gathered at authorisation and some had not been registered with the Mortgage Code Compliance Board.
The results showed 50 per cent had either no or minor failings and the senior management in most of the firms had implemented appropriate systems and controls.
Following the review three firms were referred to enforcement for non-disclosure of adverse information during the authorisation process, two firms are being issued with private supervisory warnings and a further firm agreed to cease trading and vary its permission for failing to hold adequate qualifications to write mortgage business.
Stephen Atkins, group compliance director at Freedom Finance, warned: “Three firms out of 51 being put into enforcement is very high. If you look at the ratios, this would suggest there are probably a few hundred mortgage firms out there that may fit into this ‘higher risk’ category or who are uncompliant. This will undoubtedly involve the non-conforming market somehow. The FSA power wagon is set to snowball.”
Mike Fitzgerald, sales director at Brentchase Financial Services, said: “I’ve heard of two employees at one firm who are operating but haven’t even taken their CeMAP qualifications. It’s time the FSA came down on these firms. Then the regulator can focus on helping brokers.”
