There are growing concerns that fees charged by networks will be higher than anticipated under the Financial Services Authority (FSA), if a Treasury consultation paper goes ahead unchanged.
The consultation paper, Mortgages and General Insurance Regulation: Transitioning Complaints, was published in September. The paper discusses whether the Financial Ombudsman Service will have powers to follow up complaints made against advisers retrospectively in cases concluded before Mortgage Day.
However, there are worries that principal firms may become responsible for the actions of their appointed representatives (ARs), which would have cost implications as their exposure to risk will be hard to quantify.
Stephen Atkins, compliance services director at Mortgage Next, said: “Principal firms may have to provide run-off cover for all their ARs. And for those firms who are already ARs for life companies but have a separate mortgage arm, they may have to pull this back into the group under de-polarisation rules.
“It is unlikely that their principal will want to provide run-off cover for this.”
John Malone, national mortgage manager at Premier Mortgage Services, agreed: “Someone has to take responsibility for any loose ends that may be lying around after the FSA takes over, but it could impact on the fees charged by principal firms.
“At the end of the day it is all about knowing who they have taken on. It will not be 100% perfect but the Treasury has to try and protect the consumer.”
