Speaking at the trade body’s annual dinner, John Gummer, chairman of AIFA, believed principles could be open to misinterpretation, to the detriment of the customer.
He also called for greater consultation with advisers by the Financial Services Authority (FSA) to make sure the principles governing the industry did not end up harming the mortgage intermediary market.
Rob Griffiths, associate director of the Association of Mortgage Intermediaries, commented: “The point he was trying to get across is that the move towards principles-based regulation is a key change for everyone but, at the moment, we are not quite sure where it leaves firms. We’re some way from knowing exactly what to do and we’re working with the FSA and our members to make sure we know what it means practically. We want to get the full benefits of the move without any potential disadvantages to mortgage intermediaries.”
Gummer also expressed that intermediaries shouldn’t have their business dictated to by regulation and the protection which it provides is there to ensure the customer is treated fairly.
Instead, he added, it should be brokers who dictate the future direction with the industry, with regulation working with them to create a better industry.
Robin Gordon-Walker, spokesperson for the FSA, commented: “When we were developing statutory mortgage regulation, we consulted trade associations and we continue to speak to them and get feedback from the industry, which makes sure regulation works. Otherwise, regulation would be 10 times harder to implement.
“Introducing principles-based regulation is a challenge for both us and the industry. It will require a newish way of thinking, but the benefits for everyone in the market will emerge over time.”
