Mark de Ste Croix

Mortgage Intelligence

The nature of early supervision visits from the Financial Services Authority (FSA) will be a ‘getting to know you’ exercise, with the FSA on a learning curve as steep as the one those being visited have found themselves on. However, where the FSA lacks mortgage experience it will learn and adapt very quickly.

An early visit is about finding out if a firm has implemented the new rules, on a general level, in a way appropriate to its structures and procedures. The FSA will look at whether the firm has put in place the various practices and procedures that promote compliance and it will check the overall effort and willingness of the proprietors to comply. There will be a certain amount of leniency in the early stages but feedback from these preliminary visits should be taken seriously and changes made to reflect it.

Mortgage Intelligence received a visit one month after Mortgage Day and this was conducted in a friendly but business-like way by knowledgeable and efficient supervisors. This early contact is viewed as a positive step to developing a long-term working relationship with the regulator, which is an essential ingredient for any successful mortgage business.

Simon Chalk

Mortgage Portfolio Services

Like the majority of small firms, we have not yet had the pleasure of being visited by the FSA. However, the number of visits will increase greatly once the first batch of Retail Mediation Activities Returns (RMAR) has been returned (by lenders in particular). This is because the FSA does not, as yet, hold a clear enough picture of the mortgage landscape. The specific data that RMAR will reveal should enable the FSA to focus on key areas that it has previously highlighted as being under scrutiny, such as adverse lending, lifetime mortgages and so on.

Firms need to ensure their procedures are not only compliant, but also stress-tested as far as possible. Rather than being fearful of an impending visit, they should look upon it as an opportunity for the regulator to help steer them in the right direction. The FSA has, after all, shown a willingness to work with professional mortgage intermediaries as opposed to working against them.

My only two areas of possible concern are the amount of time and resources that an FSA visit might absorb and the lack of experience among junior staff. There has been a flow of documents from Canary Wharf, but this goes with the regulatory territory and will be no less burdensome for the tied adviser.

Jonathan Cornell

Hamptons International

Since Mortgage Day we have not had a visit from the FSA and as we were previously authorised by the Mortgage Code Compliance Board (MCCB), we have not been visited by the FSA at all.

I do not think we have any particular concerns about a visit. We were doing many of the things that the Mortgage Conduct of Business required well before Mortgage Day, so we have not had to radically change our method of transacting business. Other than a couple of meetings during the application process we have not had too much contact with the FSA – it has been limited to asking for clarification on issues that we felt were ambiguous. In addition to this, we have recently applied to take part in a few pilot schemes.

From speaking to people in other firms who have been visited, one area in which they were surprised that the FSA was interested in, was how non-regulated mortgages were treated under the sales process. So simply assuming that because a particular case is commercial the FSA will not be interested has turned out to not always be the case.

Sue Cox

Bananas Inc

We have not been visited by the FSA at Bananas Inc and do not really have any substantial misgivings about a visit in the future.

We are fully authorised and have invested in our compliance systems over the past year or more to ensure that we are completely up to date with FSA requirements. Bananas Inc and its principal, MD Nationwide, both have a team of full-time compliance personnel employed to ensure we work to the rules and regulations set out by the FSA.

Pre-FSA we were controlled by the MCCB, so the new regime has not been too much of a culture shock, it has simply been a learning curve. We have had to familiarise ourselves with the different procedures, forms and so on.

We have been led to believe that FSA visits are conducted in a constructive manner. We would comply with any request that inspectors might make of us and view an FSA visit as an opportunity for full disclosure on our part and constructive guidance, where necessary, on their part.

Chris Batson

Mortgage Force

We have not yet had an FSA visit but we hope the initial routine visits from the FSA will be conducted in a similar style to historic MCCB visits. The MCCB staff’s aim was always to assist those firms who work hard to get the regulatory requirements right, but may have missed one or two issues, or those who are unclear on some aspects of the regulatory requirements.

As some of the former MCCB staff are now working for the FSA it would be pleasing if they were permitted to continue their supportive nature. After a period of time, every firm should be used to the new regulatory procedures and have no excuse for major breaches.

For those firms still paying lip service to mortgage regulation, let alone statutory regulation, the writing is on the wall and we should not expect the FSA to be unduly lenient.

If the FSA was to be very hard on firms with immediate effect, the sector could take a huge step backwards. It could also cause serious damage to consumer confidence should firms be driven out. The large increase in regulatory fees is another factor which needs to be kept in mind.