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Confusion reigns as exam deadline looms

It is just over 10 weeks until D-day when mortgage brokers must have gained their minimum mortgage qualifications to continue doing loan business but no one seems quite sure how many still have to make the grade.

The Mortgage Code Compliance Board&#39s deadline is December 31, when all IFAs advising on mortgages need to have obtained the Maq or Cemap bridge paper to be able to give advice.

The MCCB had been confident that the 84,000 advisers registered for exams would pass but last month it conceded that it was more realistic to expect 50,000-55,000 to pass.

Spokesman Brad Baker says “We have downgraded the total number of active sales staff in the industry to 70,000 and we hope about 55,000 will pass.”

Last week, IFA Promotion said only 950 of its 10,000 listed IFAs have qualified and it is warning that many advisers face a last-minute dash.

Chief executive David Elms says: “If they rate mortgage business as important, given the deadline, they should start thinking about qualifying pretty quickly if they want to keep servicing their existing client base.”

Trade body the Intermediary Mortgage Lenders Association says it does not know how many IFAs have to pass. It says the numbers passing are inflated by lenders putting staff such as call-centre operators through their exams. This could disguise a lower number of IFAs, who have left it very late.

Spokesman James Mayne says: “I think there will be people who will not have passed who will have to find alternatives like being supervised for up to two years by someone who is qualified.”

But while all will not be lost for unqualified advisers when they wake up on January 1 as the MCCB is allowing them this time to trade under supervision, sole traders will be left in a tricky position.

Baker says: “It is fine if there is someone to provide supervision but if you are unqualified in a single-adviser firm, you will have to drop down to providing information-only.”

Baker estimates that currently 60 per cent of single-adviser firms are qualified, leaving the rest in a position where they may have to close to business or stop giving advice unless they act now.

Scottish Widows Bank, which does the vast majority of its lending through intermediaries, agrees that it is the one-man bands who could be hit hardest as they have no option but to qualify.

Senior manager (business development) Murdo McHardy says: “It is in the interest of oneman bands to get qualified. A network cannot take responsibility as it would not be able to directly supervise everyone.”

National broker franchise Mortgageforce will not recruit anyone who has not passed their exams from the start of November.

Managing director Robert Clifford says: “The mortgage intermediary market is a cottage industry and it will be difficult for the one-man and two-man bands and I do not want to see 5,000 to 6,000 sole traders go out of business.

“They can become information only but the cynic might say that the consumer would lose out as they no longer have access to advice or have the protection of an adviser&#39s PI cover.”

Broker club and technology platform Mortgage 2000 also sees flaws in the information-only loophole, saying there is a thin line between information and advice. It believes it will be difficult for brokers not to influence a client&#39s decision when that is what they have always done.

The company says unqualified brokers can easily keep trading unnoticed until April when they have to renew their annual MCCB registration.

Sales and marketing director Sean Hornsby says: “Come January 1, what mechanism is there to stop people doing business? In my opinion, nothing will be taken away from the intermediary at that date as they will still be MCCB-registered. There is nothing in place to stop intermediaries trading and we will be totally reliant on their honesty. The difficulty will be when brokers try to renew their registration in April.”

Specialist lender The Mortgage Business director of strategy and planning David Parry shares this view.

He says: “We do not know how brokers&#39 qualifications will be policed after the end of the year. This is something we will be picking up with the MCCB and asking for clarification on.”

But he says it is not all doom and gloom as there will be ways for unqualified brokers to make money without putting clients at risk.

Parry says: “I know some brokers have set up facilities to refer clients to qualified advisers in exchange for a fee. I think this is fine as long as it is made clear to the client why they are being referred.”

Southern Pacific Mortgage says the picture is not as bleak as some are painting as there are still opportunities for those who have not qualified.

Director of credit Stuart Aitken says: “Some distributors and packagers will take on compliance responsibility for those who have not qualified.”

Although the deadline does not single the end of the road for the unqualified, however many there are, the overwhelming view is that there is no room for complacency and it is time for brokers to get themselves to their local driving test centre to take the exam or risk losing out.

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