Q. What do brokers have to do to ensure they adhere to the new regulation?
In June this year, the Financial Services Authority (FSA) released the draft version of the regulatory regime (Draft Mortgage Sourcebook) with the focus being placed on protecting consumers throughout the lifetime of their mortgage.
Under the Financial Services and Markets Act, the FSA has not been given responsibility for regulating mortgage advice given by lenders, brokers and other intermediaries. However, lenders are responsible for taking reasonable steps to ensure that advisers who sell their products comply with the new pre-sale disclosure requirements.
The last responses to the Draft Mortgage Sourcebook will be taken in mid-September and the new regime will be implemented towards the end of 2002.
Although intermediaries do not actually have to do anything to comply, they will need to have a thorough understanding of the areas covered in the sourcebook. Lenders may be changing the format in which they give information about products and services to intermediaries and it is important they understand why these changes have occurred.
The need for up-to-date and accurate information may also affect how intermediaries receive and use product data. There will be an increasing need for systems that lenders can feed up to the minute information into, which advisers can then retrieve.
Brokers can obtain copies of the Draft Mortgage Sourcebook and the latest information on mortgage regulation at www.fsa.gov.uk.
Q. Do brokers still need to become members of the GISC before the end of September if they wish to sell products from more than one insurance provider?
The General Insurance Standards Council (GISC) has temporarily suspended its timetable for implementation of Rule F42. It is expected to announce if and when F42 will come into force once the outcome of the Competition Commission’s appeal tribunal is known ‘ expected in mid -September.
There is currently no regulatory requirement for intermediaries to join GISC, or to submit membership applications. Until F42 is implemented, GISC members are free to deal with non-members and membership application remains voluntary.
Advisers are entitled, if they wish, to operate without GISC membership or ‘appointed agent’ status. However, it is recommended that advisers do not delay obtaining membership. Advisers can apply for membership and get the latest information at www.gisc.co.uk.
Q. What is the difference between the MAQ and CeMAP exams that brokers need to take by December 2002?
Advisers who currently do not have any mortgage qualifications must take the three CeMAP papers. Those who already hold CeFA or the FPC can opt for the CeMAP Bridge or the MAQ.
Advisers only have just over a year to qualify and the availability to sit the exams is limited. CeMAP 1 and 2 are multiple choice and, as such, the Institute of Financial Services has taken advantage of touch screen technology with the exams available to take in over 150 locations and increased flexibility over dates and times. The CeMAP Bridge and the MAQ are single paper qualifications assessed through a mix of multiple choice questions and written answers to case studies.
The MAQ three-hour exam paper is in two parts. The first comprises 50 multiple choice questions. The second consists of two case studies. One covers setting up new mortgage arrangements and the other covers the servicing of existing mortgages.
The CeMAP Paper 3 and Bridge Paper exams are examined quarterly with, this year, an additional sitting in October. This means advisers only have six opportunities left before the December deadline. The MAQ qualifications are also held once a quarter.
The three CeMAP papers cost £70 each and the Bridge Paper costs £95. The costs for MAQ depend on whether you are a member of the CII. The entry fee is £59.
Both the CII and IFS offer workbooks and learning packages to assist advisers in preparation for the exams.
Details can be found along with application forms at www.cii.co.uk (for MAQ), or www.cib.org.uk for CeMAP qualifications.
Q. Where can intermediaries get help and advice leading up to the qualifications?
One of the most difficult things for advisers is committing time to prepare for the qualifications. As a result, there is the risk that advisers could leave the exams until the last minute. A variety of networks, packagers and lenders have identified this need and now operate courses or training sessions to bring advisers up to speed with the qualifications.
As well as providing useful information, it can also make the whole process easier if advisers can work towards the qualifications as part of a group and set time aside to focus on ensuring they pass the exams. It is important for brokers to remember that after December 2002 mortgage advisers without qualifications can no longer advise on products.