The Mortgage Code Compliance Board (MCCB), the non-statutory regulator of the mortgage market, has confirmed 78 adviser firms were de-registered last year after failing to provide evidence of professional indemnity (PI) insurance.
Luke March, chief executive of the MCCB, said: ‘When we introduced requirements for professional indemnity insurance in 1999, we de-registered over 200 firms for not taking out the required cover. Our recent sampling project and swift response to evidence of breaches shows our effectiveness in eliminating bad practice and removing firms that pose a real risk to consumers.’
However, the de-registration of the 78 firms happened over the course of the year and lenders were notified as and when decisions were made.
The MCCB will not be publishing the names of the firms concerned although it has the power to do so. However, the regulator has hinted those firms without PI cover at renewal this year may well be publicly named.
Brad Baker, spokesman for the MCCB, said: ‘Professional indemnity insurance is a compulsory requirement for firms who wish to join the MCCB. In the past they were allowed to warrant that they had it in place afterwards, but this year the MCCB will be asking for proof of cover upon renewal.’
But Sally Laker, managing director of Mortgage Intelligence, believes making the announcement now could just be a timely warning from the MCCB that advisers can and will be de-registered for transgressions at a time when it is seeking out firms operating without the mortgage qualification.
‘Any brokers not acting within the guidelines might be under the misapprehension the MCCB can only threaten brokers. It is a warning they cannot continue because they have until re-registration in April if they intend to remain in the industry,’ she said.
Baker said he did not expect another cull in the spring: ‘It is another example of the level of checks in place, because the MCCB already checks when it makes compliance visits and acts upon tip-offs from insurers, although the number of firms without professional indemnity insurance is not thought to be widespread.’