This is the stark warning from Chris Cummings, director-general of the Association of Mortgage Intermediaries, who has said the mortgage market could be left with only a few ‘mega-networks’ and ‘super firms’ if the regulator gets its way.
Get the daily news delivered to your inbox
The review was initially aimed at the investment sector, but it now seems certain to encompass the mortgage sector as well, with potentially dire consequences for smaller firms and the market as a whole.
Cummings said: “There is a danger of regulatory contamination in this, but it is essential that regulation remains appropriate to the mortgage market, and is not some hand-me-down equivalent from the investment sector. This discussion paper looks to be of key importance to the mortgage community as, from early indications, it will make regulation look like a storm in a teacup.”
Under its proposal, ‘advisers’ would be divided into four categories: those who can offer generic advice, direct sales forces who can use factfind information but offer no other advice, whole-of-market brokers who charge a fee or commission but have to negotiate wholesale products directly with the lender or large IFA firms.
Find the latest industry jobs
For Linda Will, managing director of Accord Mortgages, the proposals are a danger to the whole marketplace.
“This goes against everything the FSA has tried to do for the last couple of years. Top level IFAs would have to belong to a professional body, but this would become a quasi-regulatory entity which the FSA sub-delegates regulation to. Small brokers stuck in the middle, may not be able to negotiate pricing so they will be pushed into networks.”
A spokesperson for the FSA emphasised: “The review is ongoing and we are looking for an industry led solution. However, it is still a discussion paper which won’t be published until 27 June. If there is some read-across for the mortgage and insurance sectors, there will be a consultation process which will allow for further views from the industry.”
