In December the Financial Conduct Authority (FCA) published the paper The FCA’s approach to advancing its objectives 2015. In it, the regulator set out three operational objectives. These are to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system and to promote effective competition in the interests of consumers. The document also sets out 11 principles for business.
These objectives were clearly borne in mind when the FCA also laid out guidelines on the role of compliance in financial services firms, after a recent thematic review on flows of information and conflict of interest issues in firms offering investment advice.
The message is clear: compliance is an integral part of a firm’s business practices. Sensible firms would comment that many of these moves are good business practices that should be followed anyway. Transparency and open communication have to be the building blocks for any successful ongoing business relationship.
To that end, ASTL members recently agreed to a couple of key new additions to our Code of Conduct which should play an important part for both brokers and their clients:
- If an ASTL lender does not undertake regulated mortgage contracts then this should be shown on their website; and
- Payments to brokers will be in line with MCOB rules.
This means no incentives or inducements which are retroactively based on cumulative targets such as volume overrides. All inducements need to be quantified in cash terms and disclosed to the customer.
These measures are part of the ASTL’s ongoing mission to raise standards in the bridging industry. Whether regulated or unregulated; it is important that all lenders operate to high standards that embody transparency, whether they are dealing with brokers or directly with the borrower. This should give added confidence to brokers to know that when they deal with a lender that is member of the ASTL they have a guarantee that both they and their customers will be treated fairly and ethically.