Approved persons: a hurdle too far for brokers?

Tuesday 9th February 2010

By Bill Warren, managing director, Bill Warren Compliance LLP Compliance.

Much has been written about the expectations of the regulator and how as regulated firms we must all comply with their requirements  including the FSA’s principles of business.

I am thinking here in particular about principle eleven. It states we must be open and honest in our relations with the regulator. We have all seen in the press just what happens when a firm or an individual fails to comply with this principle.

Commentators often say that effective regulation is a two-way relationship - three ways if you include that essential ingredient the client. But does this always ring true when it is the regulator being open with authorised firms?

I’m thinking about the very recent series of consultation papers issued by the regulator following the MMR paper in October 2009.The closing date for feedback was the 31st January 2010. However, on the 26th January 2010 consultation paper number 10/02 was issued labelled Mortgage market review-Arrears and Approved persons. This paper set out the regulator’s decision to introduce  new requirements for additional approved persons and arrears management, both of which formed part of the intended feedback into the first Mortgage Market Review consultation paper.

So, the FSA had made these decisions before the consultation period had ended. Now whilst the FSA have every right to do so they are also supposed to abide by the requirements placed on them by parliament to consult and take account of “industry views”.

No one seems too bothered about this point to-date which is a little concerning on its own. But another serious and very real concern has to be whether there is any point providing feedback on consultations at all. Should we just be accepting everything proposed? No wonder compliance professionals struggle to get their businesses on side or to respond when this is the case.

There is a good case in the context of the changes to the approved persons regime for accepting the proposals. The changes are only going back to what was required under the mortgage code prior to FSA regulation.

But the devil is in the detail as always. Can mortgage advisers who have been through the most horrendous two to three years of their lives meet the requirements to be fit and proper, for example? Have they too gathered debt problems like so many of their clients, which could impact upon their approval? Let’s hope not, especially with the regulator in the mood it is in at present.

 The message has to be talk to your compliance person asap if they haven’t already discussed this issue with you individually or collectively.
 
Bill launched Bill Warren Compliance LLP in early 2008 a compliance consultancy specialising in Mortgage, SARB and GI, has worked in the mortgage industry for 41 years.
He has held a wide range of senior appointments within compliance, sales, operational management, underwriting, customer services, customer relations (including FOS complaint management), working for several major UK Lenders, the MCRI/MCCB as National Compliance Manager, Mortgage Intermediaries, including as compliance director of a Mortgage & GI Network and RAMP (Regulatory Alliance of Mortgage Packagers).
Bill is a board member of the Association of Mortgage Intermediaries (AMI) and also holds two non-executive director positions with a large General Insurance Provider part of the Assurant Group and Complete Mortgage & Loan Services,  a Mortgage Distribution firm.