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65% of loan advisers in dark over new FSA rules

Mortgage intermediaries are unaware of how FSA regulation will affect their business, says the Association of Mortgage Intermediaries.

A survey of 200 brokers finds that many do not understand the full implications of the FSA regime due to be implemented in October 2004, such as the fact they will not be able to remain independent for mortgages if they are tied for other business.

It reveals that 65 per cent say they either know little about the proposals to extend the appointed rep regime to mortgages or are unclear about what it would mean for their firm.

Sixty per cent are not aware that capital adequacy standards are to be introduced and most brokers are concerned about the requirements for professional indemnity insurance.

Due to the likely increased costs of FSA mortgage regulation, 20 per cent have decided they will stop providing full advice when regulation comes into effect and are likely to provide information only.

The AMI says these findings demonstrate that most mortgage brokers are in the dark about the consequences of FSA regulation and in particular, they are unaware of the effect that scrapping polarisation will have on the mortgage industry.

Chairman Charles Gooding says: “Some mortgage brokers seem to think they have all the time in the world to make up their minds about their future status but this is not the case. The FSA has made it clear that it could take up to six months to authorise those firms who are currently unregulated. It is vital that firms begin making plans for the new regime as soon as possible.”

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