The FSA has confirmed that all people advising on, arranging or entering into mortgage business, including lenders and those overseeing compliance, must be registered and face the ‘Fit and Proper’ test.
It estimates that 20,000 advisers and arrangers will be drawn in under the proposals.
Final rules will be published in September, with a confirmed implementation date, provisionally set at 30 March 2011, to begin accepting completed applications, including criminal record checks, from brokers. These will need to be sent in within three months. There will be a transitional period allowing brokers to continue to work while their application is assessed.
AMI called the proposals a ‘significant step forward, protecting the public and increasing access to advice’, but said it would closely monitor whether the changes were applied at an appropriate level of authorisation.
However, lenders still think that the extension of the scheme to bank branch staff is unjustified, as the risk of fraud is lower because their system defences are better. The CML said it will impose unnecessary extra costs on lenders, but welcomed the clarification that administrative staff will not be included.
The ‘Fit and Proper’ test assesses advisers on honesty, integrity and reputation, and competence and capability. Advisers with a criminal record will not face automatic rejection; however, offences relating to dishonesty, fraud and financial crime will be scrutinised closely.
Ed Harley, head of mortgage policy at the FSA, said: “Everyone is responsible in helping us to stamp down on mortgage fraud. That applies to staff in lenders and intermediaries. Advisers who are fit and proper have nothing to fear, but people must be open and honest and that will help them through the process. We will take a common sense approach to applications.”
Mike Fitzgerald, sales director of the Emba Group, added: “Anyone who is dealing with finances should be checked and approved. I just hope it won’t be too stringent.”
Despite lender objections, Alex Ellerton, principal of regulatory consultants Bovill, said it was sensible to apply the changes to the whole market to stop financial fraud, but added: “If the FSA can’t deal with applications in a commercially viable time frame, it will cause a lot of frustration.”
