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Confusion at Treasury and FSA claims on mortgages

The mortgage industry has been thrown into confusion by conflicting messages from the FSA and Treasury over the status of advisers when regulation is introduced in 2004.

The confusion surrounds a statement in the Treasury&#39s Regulating Mortgages consultation paper which says “an independent mortgage intermediary who becomes authorised in relation to the activities of mortgage arranging and advising could not continue to be an appointed representative for other activities”.

However, the Treasury claims an appointed rep for insurance and pensions will be able to continue offering independent advice on mortgages.

But the FSA says in its new guide for firms on mortgage and general insurance regulation that the Financial Services and Markets Act 2000 will have to be amended if this is the case.

Spokesman Rob McIvor says these appointed reps could only advise on the mortgage products of companies they are tied to and not other firm&#39s products.

Financial Technology Res-earch Centre director Ian McKenna believes the Treasury&#39s plans could “decimate” mortgage distribution as only a third of introducers are independent and the rest are tied.

McKenna says there is a clear conflict between the Treasury and FSA statements and the Government may not have done thorough enough res-earch, forcing the FSA to flag up the need for the FSMA to be changed.

The mortgage industry also warns of the risk of confusing consumers as advisers could be classified as “independent” for mortgage business but as “authorised” for life and pension advice under the FSA&#39s plans to scrap polarisation.

The FSA states in its guide that CP121 “does not make proposals for mortgages”.

Prudential Premier Mortgage Service national manager John Malone says: “It would be confusing for the consumer if an authorised financial adviser can be independent for mortgages.”


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