The existing register has been widely criticised by firms, trade bodies, consumers and politicians as confusing, overly focused on industry and impossible for consumers to identify who they were dealing with and even, in a timely manner, whether they had been banned.
The regulator has been looking at how to improve this situation for years.
Extending the approved persons regime to mortgage brokers was something the FCA started looking at way back in 2010.
However, its work on this was superseded by the senior managers and certification regime (SM&CR), which finally came into effect last year.
In the run up to this, senior officials at the regulator tabled plans to scrap the register, suggesting that the SM&CR would suffice in its place. But this approach was not welcomed.
FCA must maintain its mandate
The regulator received overwhelming feedback from consumers and the industry that the register must be maintained.
Relying on senior managers to ensure all employees, including advisers, were fit and proper persons was judged to fall short of delivering the FCA’s mandate to protect consumers.
In the run up to the financial crisis, mortgage broking firms and packagers proliferated.
As in many walks of life, there were those who did a good job and those who took advantage of the situation and took consumers, and lenders, for all they were worth.
Bad habits were allowed to develop and, left unchecked, many took hold.
Where are they now
Today, the vast majority of rogue brokers who dragged down the reputation of mortgage advisers and mortgage advice are gone from the mainstream market. But where to?
The reality is that a lot of individuals who pushed sub-prime, self-cert mortgages in the pre-crisis free-for-all remain in the market.
They have just shifted their focus, often to peer-to-peer lending and short-term finance – areas where the regulator has less oversight.
But consumers are still exposed to these individuals and their ‘advice’.
Questionable standards continue
Lenders and networks also know all too well there are still brokers operating in the mainstream residential market whose standards are at best questionable.
Individuals are struck off lender panels on a regular basis, often resulting in their expulsion from networks, only for them to pop up again at another network or even as a DA.
To date, the regulator has done little to address this.
Hopefully the new directory, which goes live in March 2020, will go some way to put this right.
It will make publicly available details of individual brokers, their full name, the roles they’ve held, the start and end date of their employment and what sort of business they are qualified to deal with.
As the regulator has said, consumers will be relying on this information and so the onus will be on firms to ensure that their fitness and propriety assessments are sufficiently robust.
It’s a fine balance for the regulator to strike – a wrongful black mark against an individual has the power to end a career.
But fail to make that mark, and consumers lose out.