In its report, the SBPP drew particular attention to the issues of ‘Treating Customers Fairly’ (TCF); a move to principles-based regulation, and the costs and burdens of regulation.
In its overview of TCF, the SBPP said there was ‘a significant lack of clarity and an unhelpful ambiguity about exactly what TCF means for smaller firms and how it will be applied by the Financial Services Authority (FSA) in practice.’
The SBPP also expressed its concerns over the ‘unhelpful interaction of the respective Financial Promotions rules set by the FSA and Office of Fair Trading (OFT). This has been especially confusing for firms that offer both mortgage and consumer credit arrangements.’
The report also highlighted issues regarding the introduction of the Markets in Financial Instruments Directive (MIFID), and depolarisation.
Alan Lakey, senior partner at Highclere Financial Services believed the move to a principles-based approach, particularly in the area of TCF, would provide the industry with big problems over the coming years. He said: “It is very hard for firms to know exactly what to do when trying to follow principles because it is up to individual firms’ interpretation of the guidelines being set. What some people might think is right, others disagree with. When the FSA comes and visits your firm, you might think all of your practices are correct, but by moving to principles it leaves some uncertainty. I think this problem will dominate the market for some time to come and at least the next five years.”
The SBPP also urged firms to complete the Panel survey questionnaire if they receive one, and said this would allow the Panel to act on any views given by intermediaries within the mortgage market.
