A bit about the Financial Conduct Authority

The purpose of this blog is to provide a bit of background to the new Regulator, The Financial Conduct Authority (FCA) in terms of its statutory and operational objectives. These are the things that will shape the way that regulation will be  effected. For those of you who are participants ( willing or otherwise)  in the TC Handbook's requirements, this is a little bit of the stuff that your T & C files should be  made of.

The Government has set out the focus for the FCA as follows.

As a STATUTORY OBJECTIVE, the FCA is required to ensure that relevant markets work well and this will therefore be the focus of the FCS's work. Apparently fairly general terms, these and once more 'relevant markets' appears but we need to remember that this will be defined by the scope of FSMA. In the FCA's document published a while ago,  Journey to the FCA, three key operational objectives have been identified.These objectives focus on the integrity of the market, consumer protection and competition.

The  three OPERATIONAL OBJECTIVES are as follows:-

To secure an appropriate degree of protection for consumers.

One particular area of focus will be to place greater responsibility on providers to ensure that products only reach the customers they were designed for. The FSA had already started this work with lenders in particular and the FCA will take this on further. There will also be  greater focus on provider's wholesale activities and the FCA will have greater powers to intervene.

To protect and enhance the integrity of the UK financial system.

One very interesting point made by the FCA is that it will not " trust in the integrity of markets".The FCA will not accept that there are some areas of the market in which they should not be interested  because the sophistication of the parties enables them to look after their own interests. We have all learned from this assumption!


To promote effective competition in the interests of consumers. 

This is a particularly interesting objective on two counts. Firstly it is new to financial services regulation. It is not an objective that the FSA had specifically. In this context it should give some comfort to smaller firms on the basis that competition should mean more firms available across a range of niches and sizes. Of course the devil is in the detail! It will be interesting  to see exactly where this sits with the Competition Commission. There is a document being thrashed out between the FCA and the OFT on Competition Issues although in point of fact of course, Consumer Credit responsibility will pass to the FCA in April next year. I am also mindful of the FSA's statutory objective around financial crime and the simple fact  and existence of the Serious Organised Crime Agency (SOCA) whose raison d'etre is exactly that. I would expect the FCA to document a memorandum of understanding (MoU) to be issued between the FCA and SOCA perhaps, although there is nothing currently on the FCA site as far as I can see.

ONE STATUTORY OBJECTIVE

TO ENSURE THAT THE FINANCIAL SERVICES MARKETS WORK WELL

THREE OPERATIONAL OBJECTIVES

PROTECT CONSUMERS - PROTECT THE SYSTEM - PROMOTE COMPETITION

Lifetime Mortgages - do you ask enough questions?

There is no doubt that there are good opportunities to offer mortgages to persons who are, shall we say, advancing in years.  I have to put it like that for the simple reason that it came as a bit of a shock to me to realise, as I prepared to write this article, that indeed I fall into the category of persons who might be  eligible for a Lifetime Mortgage. There are also a number of risks - both for the consumer and for the intermediary as well. 

I was recently asked to suggest a number of questions that might be  asked in addition to those normally found in a mortgage Fact Find  and it occurred to me that perhaps this was an opportunity to offer this information to those of you who read this blog. After all there is nothing new in all this but there is no harm in sharing, is there?

To this effect I have set out a mythical extract from a mythical fact find  relating to an entirely fictional individual who I have named Benjamin -  you know, like the bunny in Beatrix Potter! I have put down as many questions as I could but in doing so realise that de facto  a standardised factfind falls entirely short of the mark if you do not include enough space for client-specific information - which you will see from the size of the notes section that this document fails to do!

The  point of the extract however, is to attempt to consider all those questions that might reasonably be  asked  to assist a prospective borrower in choosing to take on a Lifetime Mortgage and to ensure that a mortgage adviser has asked enough questions to discharge his or her duties under the Financial Services & Markets Act as well as any duty of care under Common Law. Clearly the brevity of some of the possible answers mitigates against the completeness of the document and so I would make the very obvious point that  I am just attempting to identify questions that should be  asked and not assessing the robustness of any answers, nor for the avoidance of doubt , am I attempting to determine any consequences to the answers, in terms of actions to be  taken or not to be taken or , for example, in respect of information that should or should not be  provided.

For those of you currently undertaking the advising and sale of Lifetime Mortgages, I would hope that this document may be  of some use or assistance  whilst at the same time pointing you in the direction of the Equity Release Council ( http://www.equityreleasecouncil.com ) who appear to offer some valuable support and advice.

Do you want to reduce your regulatory costs?

Is there anyone out there looking to minimise the costs of regulation?

I have  a client who is currently an Appointed Representative and who is looking to set up a new venture as a limited company for the sale of mortgages and insurances , as a directly authorised firm. She is looking for a business partner ( co-director) either in a similar situation (i.e currently an AR but had enough of it so looking to go directly authorised) or perhaps an existing firm that is simply looking to share costs going forwards by adding a new director.

Obviously this is a risk to all parties and so I offer this out purely to see if there is any interest. The person involved has previously been authorised and in my opinion ran a fairly good operation until the downturn, when like many she sought refuge in a network. I have dealt with her previously, when she was part of the Mortgage 2000 Intermediary 'Network' (M2i). She operates a compliant operation and has had no complaints from customers to date

If you are interested at all, please contact me in the first instance by email (david.c.payne1@btinternet.com) or by commenting on this blog and I will arrange further contact.

Please note: For the avoidance of doubt and in the interests of transparency, I will receive no financial benefit as a result of any subsequent arrangement or deal.

Finalisation of the BTL Supplementary Form

Following on from my blog post originally written 18th March 2013 regarding supplementary questions for BTL cases, I have reviewed the various responses received back. I have made a few minor amendments to the draft and those are available now as edited in the Blog here :
http://www.ukmortgagecompliance.blogspot.co.uk/2013/03/buy-to-let-fact-find-supplement.html

I apologise to those of you where I have not implemented your suggestions but I was looking for a document that would be  broadly appropriate to firms and which would, in spite of what might appear to be  statements of the obvious, provide additional evidence of due diligence in BTL cases.

Please note that there is no intention to create any legally binding contract or agreement for compliance services by the publication of this blog post or any other post through these pages except where firms are already making a payment to Mortgagecomply.com ltd for the provision of such services.

FCA web site and the MMR

I have just been looking around the FCA web site just to get a feel for it as it were.

It is good to know that the links for GABRIEL and ONA at the present time take you back to the old FSA pages for entry so there should hopefully be no issues for anyone with RMARs to do in the next 30 days - probably the vast majority of small firms.

I think we have to consider it early days for the FCA site however. Some pages look a little odd, if not unhelpful. For example I had a look at the page under Firms with specific reference to Home Finance (it's under the Show More + tab) . The actual URL is

 http://www.fca.org.uk/firms/firm-types/mortgage-brokers-and-home-finance-lenders

You can see from this that at the present time it's not very helpful and on a preliminary search I couldn't find anything like the small firms guides that the FSA had. Hopefully these will not disappear as they were very useful!

What I did find however, was a Planning Tool for small firms to prepare for MMR. It was published according to the site back on 20/02/2013. Because it is loaded in a limited area on the page (Iframe or Div - I didn't look)  it is quite difficult to read the whole document and it is better if you download the thing to look at it properly.  The URL is below if you want to have  a look at it on the FCA site

http://www.fca.org.uk/your-fca/documents/fsa-mmr-planning-tool

The 'old'  FSA site also holds a copy that is easier to read at :

http://www.fsa.gov.uk/static/pubs/other/mmr_planning_tool.pdf

It looks to be  the same document.

This is presumably the document that will form the basis of the questionnaire that will be  carried out by all firms some time this coming Quarter by the FCA.

The plan is  not over complex but I will be  doing some work on this over the next week or so and will be  publishing an update of it with suggested actions to my registered clients.

If you are not a registered client ( i.e. you don't pay me for my compliance services) then this might be  a good time to think about it...

Business Opportunity

Is there anyone out there looking to minimise the costs of regulation?

I have  a client who is currently an Appointed Representative and who is looking to set up a new venture as a limited company for the sale of mortgages and insurances , as a directly authorised firm. She is looking for a business partner ( co-director) either in a similar situation (i.e currently an AR but had enough of it so looking to go directly authorised) or perhaps an existing firm that is simply looking to share costs going forwards by adding a new director.

Obviously this is a risk to all parties and so I offer this out purely to see if there is any interest. The person involved has previously been authorised and in my opinion ran a fairly good operation until the downturn, when like many she sought refuge in a network. I have dealt with her previously, when she was part of the Mortgage 2000 Intermediary 'Network' (M2i).

If you are interested at all, please contact me in the first instance by email (david.c.payne1@btinternet.com) or by commenting on this blog and I will arrange further contact.

Please note: For the avoidance of doubt and in the interests of transparency, I will receive no financial benefit as a result of any subsequent arrangement or deal.

Welcome to the FCA!

Well, in case anyone is  working today and in case you haven't spotted, you now have a new regulator: The Financial Conduct Authority.

This will mean a number of new things no doubt over the coming weeks and months but the first couple of points are:-

IT IS TIME to change your stationery and notices on web pages, emails and so on.

Authorised and regulated by the Financial Services Authority

should be  replaced by :

Authorised and regulated by the Financial Conduct Authority

Your Firm Reference Number (FRN) will remain the same BUT, some firms refer to this as their FSA Number. If yours is one of these firms,  then it is time to change it from FSA to either FCA or, more precisely FRN.

You actually have  six months to change your stationery but no time like the present for all those miscellaneous references on emails and web pages, not to mention any financial promotions in paper publications.

THE SECOND CHANGE is that the site for all of us is no longer :

www.fsa.gov.uk (this still exists but will not be updated)

it is now:

www.fca.org.uk

(Notice that it is a .org and not a .gov ! )

 

This is your prime point of reference going forwards. This is where you will access GABRIEL and ONA and such like and get any information on small firms . Your usernames and passwords should be  unchanged.

I hope that you all had a good Easter!