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Compliance measures bearing fruit, says MCCB

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  • 17/10/2001
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MCCB reports a reduction in Mortgage Code breaches across the board

Standards of compliance are improving and measures to protect homebuyers are bearing fruit, according to the Mort-gage Code Compliance Board’s (MCCB) annual report.

The results of 2,000 intermediary compliance visits showed an overall improvement in code compliance, with a reduction in code breaches across the board.

Among the compliance failures that came to light, a few key issues cropped up more regularly than others. Failure to indicate the level of service being provided, whether advice or information, and failure to properly provide information and an explanation of mortgage products occurred in up to a quarter of advisers visited.

Other common compliance failures were: neglecting to adequately disclose fees and refund fees as required under the code and Section 155 of the Consumer Credit Act.

Commenting on the breaches, Brad Baker, MCCB communications manager, said: ‘The big issue is communication, en- suring the customer understands the level of service they are receiving. We have issued good practice notes on all areas highlighted and we will be revisiting those and keeping up the communication with brokers.’

The MCCB attributes this improvement to increasing evidence that firms are incorporating code requirements into their sales procedures and increasing attention to training and supervision. However, the board intends to focus on common code breaches in the coming year.

Most code compliance failures are not difficult to correct. Baker said: ‘Firms are asked to prepare an action plan to ensure that their processes no longer breach the code. We monitor that to make sure it is implemented, and in the great majority of cases that happens.

l In the first year for compliance monitoring of lenders, of 52 visits between 1 May 2000 and 30 April 2001, three lenders were given red ratings, indicating urgent attention was required towards code compliance. 24 others were given less serious yellow ratings and the remaining 25 received green ratings.

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