Dan Waters, director of retail policy division at the Financial Services Authority (FSA):
“Mortgage regulation is still relatively new and we have planned the effectiveness review in stages to identify trends and measure progress against the intended outcomes over time. Overall, we believe that in the areas we have looked at, the mortgage regime is operating effectively where firms comply with the requirements set out in MCOB. There continues to be pockets of non-compliance and it is disappointing that the non-compliance relates to some of the basic requirements of the disclosure regime. The next phase of the review will focus on the sub-sectors of the mortgage market, where we believe there is more likely to be consumer detriment. It will also look at whether consumers are taking suitable and good value mortgages and where they are treated fairly over the life of the mortgage.”
Bill Warren, director at Complete Mortgage and Loans Service:
“I would have to say that regulation has been fairly positive. While it has been frustrating at times, in the main, I think the FSA has done a good job. The whole regime has been a massive learning curve for both the regulator and for intermediaries.
Admittedly, the lack of clarity surrounding the rules on client money and Financial Promotions at the start was extremely frustrating, but in the main, a lot of these discrepancies have been ironed out. At the moment, the biggest concern would be the sheer volume of initiatives being implemented by the FSA and the timescale in which advisers have to carry out these tasks can prove challenging. But in all, I think the FSA has done well in the way it tries to communicate with the industry.”
Rob Griffiths, associate director at the Association of Mortgage Intermediaries (AMI):
“‘Mortgage Day’ now seems a long time ago, especially when we consider that the FSA is no longer in hand-holding, educational mode. The heat has certainly been turned up on the industry with this year seeing the regulator taking mortgage broker firms through the enforcement process for the first time, and issuing fines. I believe the two-year anniversary of statutory mortgage regulation marks a significant point for all stakeholders. The FSA has a large programme planned for the next six months – perhaps it is trying to do too much. It is our belief that the FSA should be concentrating on two priorities – the implementation of MiFID and the move to principles-based regulation. Its plans though do mean more desk-based reviews, file-checking and mystery shopping for intermediary firms in areas such as interest only mortgages, and mortgages into retirement. The FSA has certainly turned the temperature up and we are now dealing with a regulator that feels firms have had sufficient time to get used to the rules. It is therefore imperative that firms ensure they are compliant, otherwise the punishments are there for all to see.”
Roy New, a sole broker:
“Most importantly, regulation has meant sole traders are deemed to be professional by clients and lenders alike. The downside is there’s considerably more paperwork, but you can’t have regulation without it. People get annoyed about paperwork and costs, but we all have to do it, no matter what size of broker you are. The rules give me peace of mind. There is a shield around you and guidelines you’ve got to follow, which allow very little comeback. The industry was waiting to be regulated and, now it is, it has cleaned up our image and that is totally positive. It was very hard for the FSA to take over regulating mortgages, as there are lots of sole brokers and it’s very hard to weed out the unscrupulous ones. Unless it comes to the FSA’s notice, there’s not a lot it can do, but neither could the Mortgage Code Compliance Board (MCCB). The FSA is trying and in the end, it doesn’t matter if we’re regulated, as those sorts of people will always exist.”
Thomas Reeh, chief executive of blackandwhite.co.uk:
“Regulation has improved corporate governance and made us more disciplined in the way we do business. But I think consumers have been disadvantaged. The paperwork involved is horrendous and I don’t think access to advice is as easy. A lot of mortgage business used to be done by IFAs, but they are abandoning mortgage underwriting as they’re scared to get it wrong and that’s not good. IFAs control a big market share and if they’re doing a customer’s financial planning, that should include mortgages.
From our perspective as a large broker, our systems were robust before regulation and they are even more so post-regulation. But I would argue that, if we didn’t have regulation in 2004, we would still be trading successfully and compliantly. There are a lot of checks and balances between brokers and lenders that force you to do things correctly. All those key points haven’t changed.”
Bob Sturges, director of communications at Money Partners:
“The introduction of statutory regulation was the single most important event in the mortgage industry since its financial deregulation in the early 1980s. Both have had a profound effect and proved instrumental in shaping the market. Despite earlier concerns, the industry has adapted well to the FSA’s regime. So well in fact that it has never been more dynamic, vibrant, competitive and innovative. What regulation has achieved so far is to create a more level playing field and certainty regarding the boundaries of acceptable behaviour. It has also begun to make an impression on consumers, although more work is clearly needed. None of this has come without cost and the industry has invested heavily in understanding and complying with the regime’s rules. This hasn’t been made easier by the FSA’s move to a principles-based approach, but even here the industry is showing its remarkable ability to adapt and absorb. The FSA’s challenge is to balance the reasonable need for consumers’ fair treatment against the commercial spirit.”
