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CML in legal warning to firms over monitoring

FSA mortgage regulation which encourages lenders to outsource their monitoring requirements would be open to legal challenge at “each and every stage”, claims the CML.

In a letter to FSA head of mortgage regulation Sarah Wilson, CML director general and ex-barrister Mich-ael Coogan claims an outsourced body would face significant legal risks under enhanced human rights and competition legislation.

He warns that any monitoring organisation charged with ensuring brokers comply with disclosure requirements could imperil the industry and increase costs but fail to deter rule-breaking companies due to ineffective sanctions.

He also reaffirms the CML&#39s view that the FSA is duty-bound to inform the Treasury of the opposition to its decision not to regulate mortgage advice. He claims only the FSA can seek an urgent review of the decision as the Treasury has ignored industry protests.

The letter states: “Unlike the mortgage code, which is a club intermediaries join voluntarily, the outsourced body could threaten the livelihood of particular intermediaries. It would be open to legal challenge at each and every stage. With the background of the GISC case, enhanced human rights and competition legislation, we see the risks that the industry would face as being significant.”

FSA spokeswoman Jackie Blyth says: “We will consider all responses but this is something that lenders are able to achieve and is in no way illegal.”


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