You are here: Home - News -

Raising standards

by:
  • 05/09/2002
  • 0
Following the FSA's latest announcement, Richard Fox, compliance director of the Mortgage Code Compliance Board (MCCB), talks to Ben Marquand about the role of the non-statutory regulator during the next two years

What is the history of the MCCB?

The MCCB’s history is linked to that of the Mortgage Code. The Mortgage Code sets out standards of good practice in lending and selling mortgages. It was introduced for lenders in July 1997 and for intermediaries in April 1998.

It is an independent, non-profit making company, funded by registered firms, set up to monitor the adherence of mortgage lenders and intermediaries to the Mortgage Code. Originally established as the Mortgage Code Register of Intermediaries (MCRI) in April 1998, it changed its name to the MCCB when it assumed responsibility for the monitoring of lender compliance with the Code in October 1999.

Its aim is to ensure consumers are fully informed and adequately protected when taking out a mortgage through a lender or an intermediary.

What is your role within the MCCB?

I was appointed compliance director of the MCCB in June 2000, having previously enjoyed a lifelong financial services career in banking, bancassurance and fund management with wide experience of compliance in all of these areas.

My previous employers include HSBC (Midland) and the TSB Group. Immediately prior to joining the MCCB, I was involved in establishing a major e-commerce channel for Prudential Banking. During my two years at the MCCB, I have introduced a risk-based compliance monitoring approach, developed a fully internal monitoring team and increased the board’s focus on practitioner education and sharing good practice.

What will the impact of statutory regulation be on MCCB’s activities?

The MCCB has been asked by the Treasury, the Financial Services Authority (FSA) and the industry to ensure the Mortgage Code and its rules remain fully effective in protecting the consumer during the transition to statutory regulation and that the momentum for raising standards is maintained. To that end, the MCCB remains committed to completing the introduction of the fitness and competence requirements by 31 December 2002 and introduction of its fitness and propriety checking by December 2003.

As is well known, the MCCB is working closely with the FSA, Treasury and other bodies to ensure there is a smooth transition to the new regime and is contributing its own experience to ensure that maximum consumer benefit is achieved within the Treasury’s stated objective of ‘proportionality’. Continued support of the entire industry is vital to ensure we achieve this objective.

What was your reaction to the publication of CP146?

Initial reactions to CP146 include welcoming the proposal to implement clear ‘grandfathering’ arrangements for those advisers who have acquired their professional mortgage qualifications under the Mortgage Board’s own training and competence requirements. Additionally, the FSA’s recognition of the qualification deadline of 31 December 2002 is an essential part of the MCCB’s key strategy to raise industry standards.

The statement by the FSA that the future statutory authorisation process will include provision for ‘due credit’ for registered firms in ‘good standing’ with MCCB is also a welcome confirmation. The continuation of the MCCB’s activities and completion of its core strategies is therefore essential, as these will help meet the FSA’s requirements for ‘due credit’ as outlined in CP146.

What are the main compliance challenges for MCCB in the intervening period?

The MCCB has identified some key challenges for the next two years. First, to continue to respond rapidly to changing markets. As the Code is channel neutral, subscribers have to ensure that all their sales processes meet the Code’s requirements.

Second, to continue the drive to raise standards. The key the MCCB programmes for fitness and competence (including compulsory qualifications and supervision for all advisers from 31 December 2002) and fitness and propriety checking will be fully implemented. CP146’s proposal to implement clear grandfathering arrangements is good news for the continued relevance of this work, and good news for advisers who have committed to the qualifications programme.

And finally, to continue to provide support for the industry as it moves towards future statutory regulation and meeting the FSA’s requirements. The MCCB has a programme of compliance roadshows and workshops on specialist topics (currently a national programme on the MCCB’s fitness and competence requirements is rolling out), which support articles and good practice notes in the MCCB news.

What upcoming issues are there for MCCB?

There are a couple of initial concerns arising from CP146 proposals. Firstly, full transparency of fee disclosure is a key component of consumer protection, and the Mortgage Board’s own regulatory experience indicates an increased potential for consumer detriment where fees are not fully disclosed. CP146’s proposal on a move away from a requirement to fully disclose to borrowers details of fees received for arranging their mortgages represents a potential weakening of existing requirements under the Code.

Second, CP146’s proposals regarding the mortgage selling process may lead to a lessening of the clarity currently afforded the consumer under the Code. The MCCB’s concerns include the proposed introduction of a new level of service ‘ which seems to fall between advice and information provision ‘ and the lack of a requirement for written confirmation to the customer of advice received (sometimes known as the ‘product confirmation’ or ‘reasons why’ letter). This omission may make the complaint and redress process more difficult for both consumers and firms.

Ben Marquand is deputy editor

Richard Fox will be discussing regulation in more detail at The Mortgage Event in association with Mortgage Solutions in Glasgow, Bolton, Leeds, Bristol, Central London, Birmingham and Gatwick. Contact www.themortgageevent.com


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Government building homes for cash-strapped key workers

Government aims to meet rising demand for affordable property by injecting £1.4bn into new homes

Close