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Making a change

  • 04/11/2002
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Things are finally starting to look up for mortgage brokers. After months, if not years, of concern ...

Things are finally starting to look up for mortgage brokers. After months, if not years, of concern over what form statutory regulation will take, and whether the Financial Services Authority (FSA) will dictate policy from its ‘ivory tower’ in Canary Wharf, it looks as if it is proving to be both a flexible and sensible regulator.

As a case in point, the FSA last week re-evaluated its stance over the reform of polarisation. Following the response to its consultation paper on the issue, CP121, it has decided to drop its own plans for a defined payments scheme in favour of a menu approach suggested by financial advisers. This will mean clients can choose how the adviser is to earn their fee, either through commission or at an hourly rate.

In a separate case, it has also conceded to pressure from advisers over Professional Indemnity (PI) insurance, albeit on a trial basis, and its decision should make it easier for advisers to find cover over the coming year.

While the FSA is now just under two years away from regulating the activities of mortgage brokers, it is interesting to note that both of these issues could impact on mortgage business post-2004. It goes to show it is worthwhile responding to the FSA over issues that affect your business as they may be taken on board, and could even work out to the benefit of the whole industry. As the saying goes, if you don’t ask, you don’t get.

As there isn’t a cohesive voice in the industry at present, Mortgage Solutions will soon be submitting an official response to CP146 on behalf of the brokers who attended The Mortgage Event and all those who responded to our Regulation Response campaign. But even so, the FSA has proven that it takes account of everyone who responds so it is still worth getting in contact, whatever the issue.

One area which may yet be changed, if brokers respond, is equity release, or lifetime mortgages. According to CP146, the market for lifetime mortgages is ‘currently small,’ but if KRS’ prediction of a growth to £7bn s year proves true it could soon be as commonplace as, for example, buy-to-let. With this in mind is it right that home reversion schemes are treated differently to home income plans? Would you rather the rules over lifetime mortgages are clear and simple? It is up to you.


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