The Financial Services Authority (FSA) is issuing consultation papers thick and fast at the moment and the mortgage industry must be in danger of drowning in the paperwork it is creating, but the good news is that the effort to reply appears to be worth it as the regulator is responding positively.
With CP180 barely digested, the long awaited response to CP146 (the FSA’s approach to regulating mortgage sales) has been published in the form of CP186 (draft conduct of business rules and feedback on CP146) and first impressions indicate that it has addressed the main concerns the industry had with the initial consultation paper.
Sales of mortgages will now either be advised or non-advised and the use of filtering questions will not now be a separate option. This will remove any confusion among borrowers who may have been unsure whether they had received advice and has been universally praised.
The FSA has also acted to create uniformity with the other areas under its jurisdiction by ensuring that those advisers wishing to retain the independent tag will only be able to do so if they offer a range of products that is truly representative of the whole market. And, likewise, the standardised initial disclosure documents, will look similar to those in the life and pensions industry.
However, there are still some issues which require further response. For example, while the FSA has confirmed the Government will be re-evaluating home reversion plans and second charge loans in the future, there is no time scale in CP186, which will mean that it will not be fully regulated for months if not years after Mortgage Day, leaving the industry open to future problems.
There are other issues, good and bad which will become apparent over the coming weeks, but the key point above all others is that the regulator is listening to the industry and so printing out the consultation papers and sending in responses is never a waste of time.
Ben Marquand, editor