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Mortgage clubs under pressure to provide compliance support

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  • 23/04/2002
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Advisers will demand more from mortgage clubs once regulation is in force

Mortgage clubs could be forced to offer compliance support to advisers or risk losing members after the FSA’s new regulations come into force in 2004.

Market experts are predicting advisers will want more than exclusive products, and expect help with compliance issues once the new regime is in place.

Speaking at Mortgage Solutions’ first Power Hour, Ray Boulger, senior technical manager at Charcol, said: ‘Clubs will need to offer more in terms of compliance help than they are now. At the moment they are just a shop window for exclusives and a way of getting higher procuration fees ‘ they do not actually offer the client support. If they do not start in the future they are going to have problems, so it will be an interesting one to watch.’

Some mortgage clubs are already gearing up to offer more support for advisers. Misys Lending Services, which launches on 1 May, is planning to provide extra assistance for advisers in light of pending regulation.

Andy Young, head of marketing at Misys, said: ‘By 2004, it will be absolutely key for mortgage clubs to offer intermediaries compliance support. For those clubs that provide no compliance support, it is hard to see how they will survive post-2004. With our new club, we are already supplying Mortgage Code Compliance Board fee support and setting our sights on how to provide more support for advisers once the new regime begins.’

However, speaking at the Power Hour, Simon Tyler, managing director at Chase De Vere Mortgage Management, said clubs may be deterred because of the financial drain and added liability risks. ‘The moment they start taking any responsibility then they are going to have to pay for the consequences of getting it wrong,’ he said.

John Malone, chairman of Premier Mortgage Services, said providing full compliance support to advisers would be impossible, as product documentation will need to be client specific. ‘In the past, advisers have used the same documentation for clients regardless of whether they are first, second or third-time buyers, or what kind of product they want. But documentation will have to be client specific. You can give advisers a generic template, but the only person that can individually edit it is the intermediary.’

‘Once the consultation period is over, we will be able to assess what support we can give members, but it will be impossible to provide a totally approved, compliant system, as we can not provide client specific documentation,’ he said.

John Cupis, sales and marketing director at Legal & General’s Mortgage Club, said that decisions will have to wait until details of the new regime are confirmed. ‘The jury’s out until the new regulation is finalised.’


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