The warning follows reports on one trade magazine website earlier this month which said the FSA’s consultation paper CP05/1 was proposing that an outsourcing agreement be drawn up between the lender and the packager containing an acknowledgement that the lender is ‘responsible for those regulated activities carried on by the third party processor (TPP) on its behalf’.
However, the FSA quickly moved to clarify the situation. It said: “There has been some misunderstanding about the proposals in CP05/1 and its impact on players in the mortgage market.
“The proposals only apply where an authorised firm carries on regulated activities on behalf of another authorised firm under an outsourcing agreement.”
But packagers have slammed further reports that claim the proposals still apply to authorised packagers.
John Mawdsley, director of The Mortgage Partnership, said: “These reports are wrong and are very misleading. The reports have just assumed that TPP’s are packagers. This is totally wrong. Look at the FSA’s definition of a TPP.
“It is not a definition of a packager. And packagers do not have outsourcing contracts with lenders, which this proposal clearly states has to be the case if you are to be affected by these rules.”
He added: “I cannot see any lenders ever agreeing to draw up outsourcing agreements with packagers. These proposals are referring to the back-end administration rather than the front-end where packagers are”
The FSA’s defintion of a TPP is someone who undertakes the regulated activity of administration, which includes notifying borrowers of changes in interest rates and payments and/or collecting payments due under the mortgage.
Vic Jannels at All Types of Mortgages (AToM) said: “The FSA has to be careful about how it handles this, There’s already been too much confusion created from the consultation paper.
“It should just clarify that if the TPP is not dealing with the consumer but is only acting between the intermediary and lender, then it’s participation should not come into the equation.”
