W hen it rains with the FSA, it pours – and last week was definitely a deluge. The regulator, which has a wide financial remit, has definitely been knocking on the doors of mortgage intermediaries all year, and last week saw the release of a series of reviews identifying the industry’s failings as well as a dramatic visit, police in tow, to a broker firm.
Mortgage brokers operating below standards, financial firms failing to meet its website standards and the onsite visit to Black & White summed up the working week for the FSA.
The industry is right to be worried about increased regulatory presence and pressure, especially in a climate that unfortunately, is likely to see the industry end on a low note. For Thomas Reeh, chief executive of Black & White, last week’s visit came as a shock and he was quick to inform the media he was being cooperative with the FSA. But the sight of police overseeing the removal of case files would concern any boss. Reeh speculated his business could be the victim of a malicious tip-off from a disgruntled member of staff, after Black & White was recently forced to make 25% of its workforce redundant. Does this mean the long list of other firms making redundancies should be concerned? Will the sight of police officers entering mortgage firms’ premises become the norm in the industry? That is certainly an image the market does not need, now or ever.
In releasing a series of reviews last week in the prime and sub-prime markets, the FSA said in some cases senior management was failing to adequately monitor and control its firm’s performance to ensure it is treating customers fairly. Stephen Bland, retail intermediary sector leader at the FSA, said there were an unacceptable number of firms unwilling to change and they were damaging the rest of the industry.
So, the question for mortgage intermediaries is, how do you keep up with the FSA? Is this year’s onslaught of reviews, mystery shopping and increasing enforcement notices having the impact the regulator wants, or is it still failing small mortgage firms with its education and clarification on its expectations? While many firms, especially the larger ones, are supportive of the move to principles-based regulation, the majority of smaller firms are still struggling to keep up with the requirements.
In an attempt to help the industry improve, the regulator published case studies and examples of good and poor practice to help firms assess and improve their own progress, but the question remains – will the failing firms take note?
n On a much brighter note, the resounding success of the British Mortgage Senate bears testament to the professionalism of the industry overall and the willingness of the key players to work together to forge ahead with the continuing development of the market. The feedback from delegates and speakers has been very positive, and shows there is a great desire to ensure positive outcomes for the mortgage industry, and that this conference is not just another talking shop. n
