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FSA fleshes out detail of regulatory regime

by: By Edward Murray
  • 22/09/2003
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Regulatory rules are being finalised with the Financial Services Authority (FSA) announcing intermed...

Regulatory rules are being finalised with the Financial Services Authority (FSA) announcing intermediary requirements for direct authorisation or appointed representative status. It has also put forward proposals regarding the collection of information from both lenders and intermediaries to help it monitor practitioners in the market.

Following feedback that was given on CP174, Prudential and other requirements for mortgage firms and insurance intermediaries, the FSA has confirmed a number of changes, on which companies can now act.

In a statement Sarah Wilson, director of high street firms at the FSA, said: “Firms now have all the information needed to take their major business decisions in advance of regulation. We expect large numbers of firms to apply for direct authorisation. Application packs will be available in November and we will be providing firms with help and support through our website [], a dedicated contact centre and training events.”

The FSA has changed the requirements for professional indemnity insurance (PPI), and taken into account levels of company capital, and whether intermediaries hold client money. For those holding client money there are also changes to the type of trust in which it can be held.

The rules for appointed representatives remain intact, with full details available at the FSA’s website.

Chris Cummings, director at the Association of Mortgage Intermediaries, said: “It is a very structured approach setting out the levels and we are glad the FSA has recognised the interplay between PII and capital. Firms with higher capital can have a lower PII requirement and the level of capital around client money has also changed so if you do not hold client money you have half the PI capital requirement to someone who does so it makes a big difference.”

The FSA’s data collection will require information on the type of products sold and whether the sale was advised or not. It will also be looking for information on complaints received, financial resources, detailed accounts information, and training and competence procedures. For firms turning over less than £5m reports will have to be submitted to the FSA twice a year, and quarterly for those turning over more than £5m.

Cummings said AMI was currently looking into the proposals and was consulting members for feedback. He said the need for all submissions to be electronic needs to be looked at and hopes a transitional period or some flexibility could be arranged. Cummings also said the frequency requirements were being looked into.


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