.
FSA: Mortgage and General Insurance Regulation: “The story so far.”
Andy Watson, head of mortgage and credit unions department, small firms division at the FSA, expressed the FSA’s desire to work with the industry and announced its mortgage priorities for the coming year: policing the perimeter; Financial Promotions; disclosure documentation; submission of data to FSA – RMAR reporting; sales practices of selected products – lifetime mortgages, self-cert and non-conforming and following up authorisation issues.
He said: “Firms are adapting to statutory regulation. Early impressions are that they want to learn and raise their standards. Initial thematic work has revealed variable understanding of the new regulations. Firms should look at their own procedures, especially in areas we consider to be higher risk or of current focus and must be aware that we will take action against firms that wilfully act outside the requirements.”
Ombudsman: “Successful complaint handling.”
Jane Hingston, ombudsman at the Financial Ombudsman Service (FOS), reported that it has received 220 complaints regarding mortgage intermediaries since ‘Mortgage Day’.
She urged advisers to promote the service and stressed its independence rather than being biased towards the consumer as some advisers have suggested. Hingston said: “Most complaints are resolved within six weeks. We did hear predictions that we would be swamped after ‘Mortgage Day’ but it hasn’t happened and I’m optimistic that it won’t happen in the future.”
Treating Customers Fairly (TCF): ‘The essentials for intermediaries”.
Philip Ryley, head of financial services regulation at TLT Solicitors, warned that the responsibility to deliver TCF rests with senior management. He said: “Firms must now embed their strategic approach to TCF and ensure it becomes reality. So from 2005, we will work with firms to assess whether they are making sufficient progress in implementing the fair treatment of customers and embedding a culture that supports it.”
Training & Competence (T&C): “The key to success.”
Jayne Owen, chief executive at the Corporate Training Partnerships Ltd, advised intermediaries to ensure the requirements of the adviser role for a firm is written as a job description along with a written plan of how to achieve the T&C requirements. She added: “The vital element is that records must be kept. If it’s not written down it doesn’t exist or has never happened.”
“Understanding the credit scoring and underwriting process.”
Martin Smith, senior business consultant at credit reference agency Callcredit, said: “Automated credit scoring and mortgage underwriting have increased the speed of decision-making and improved business quality. They are here to stay.”
Tom Ardle, controller of retail underwriting at Nationwide, said: “Advisers can improve the likelihood of acceptance by preparing applications fully and checking lenders’ basic criteria before submitting, as well as ensuring the application detail is as accurate as possible.”
“Mortgages for the Grey Market: Lifetime and Equity Release”.
Jon King, managing director of Hodge Equity Release, urged brokers to get involved in the equity release market. He said: “The opportunities presented by equity release are huge; this is the fastest growing area in the financial market. By 2010, 24 per cent of the population will be eligible for equity release; this will rise to 40 per cent by 2020.”
“Expanding your protection business”, “Compliant sales = Complete success.”
Roger Edwards, products manager at Bright Grey, warned brokers to ensure customers understood critical illness cover or face a mis-selling scandal. He said: “It’s imperative that brokers and customers understand the strict criteria involved in something like critical illness cover.”
“Arranging an overseas mortgage – advising the customer.”
Simon Conn, senior partner at Conti Financial Services, highlighted ambiguity over rights of ownership and complex legal systems as potential risks for private buyers in the overseas property market. He said: “Cash purchases can make the buying process simpler but they take the buyer out of the mortgage advisory process, which can leave them ignorant of some important legal considerations.”
Pammi Babbra from Powell Callen solicitors advised all overseas property buyers to make wills. She said: “I advise all buyers of overseas property to have their exit strategy in place before they buy. They need to understand the inheritance issue and to take a view on the speed and efficiency of the judicial system.”
