In its Mortgage Market Review (MMR) distribution and disclosure consultation paper published today, the FSA has proposed applying common professional standards across the mortgage market through qualifications and the extension of the Approved Persons regime.
The extension of the scheme next year will make mortgage advisers subject to the Statements of Principle and Code of Practice for Approved Persons.
However, the FSA has decided following feedback that a code of ethics should also apply to all approved persons, not just those within the remit of the Retail Distribution Review (RDR).
The FSA said: “Mortgage intermediaries and those designing structured questions will also be subject to the proposed new high-level code of ethics. Over and above this, we do not see any need to apply any additional requirements in relation to ethics.”
The FSA has also proposed that all mortgage sellers will be required to meet the same qualification standards, equivalent to a Qualification and Credit Framework (QCF) Level 3.
Mortgage advisers will have 30 months to pass all modules of a relevant qualification. This will include people who design structured questions, such as for use in internet sales. However, qualifications will not be required for those who do not deal with consumers, such as processors, underwriters or administrators.
As with its approach to RDR, the FSA will allow firms to use other assessment methods to achieve the same level of a QCF Level 3 standard.
In addition, the FSA has decided it will review mortgage qualification standards on an ongoing basis to ensure they are fit for purpose, owing to the fact they have not been reviewed since 2004.
The regulator has decided against being more prescriptive about professionalism and enhanced Continual Professional Development (CPD) will continue to be promoted as best practice.
The FSA noted that it had “received little comment” from the industry on its original proposal to have a tailored approach to professionalism in the mortgage sector distinct from the investment market. The proposals laid out in the discussion paper were for the individual registration of mortgage sellers, enhanced CPD and adherence to a code of ethics.
The mortgage industry has until 25 February 2011 to offer its feedback on the consultation paper. During the consultation, the FSA will be conducting a series of free roadshows for intermediaries.
