View more on these topics

Inside EDGE

It is difficult to feel sorry for a regulator but the FSA has probably done the best it could with an ill-thought through hospital pass from The Treasury. There was a great opportunity to create a single regulatory framework for the mortgage industry while meeting the objectives of raising public awareness and increasing consumer protection.

The draft mortgage rules will compromise the independence of IFAs and in turn consumers will be disadvantaged because potentially they will not have access to truly independent advice in one of the areas that they need it most.

Having previously been a regulator, I know they are sometimes the recipients of difficult issues but this fudge will undoubtedly influence the polarisation debate. While intermediaries will not be directly regulated by the FSA, under the proposed rules, they cannot escape its interference.

The increased regulation of lenders will undoubtedly imp-act heavily on intermediaries, particularly as lenders are made responsible for ensuring intermediaries abide by the proposed disclosure regime.

How can this be done without compromising independence and what are the professional indemnity insurance implications? If the cost of monitoring all intermediaries conducting mortgage business becomes too high for lenders, they may decide only to work with bigger brokers, effectively driving smaller players out of the industry.

Likewise, if the cost of disclosure becomes too much of a burden on smaller intermediaries, they may stop advising on mortgages voluntarily or be forced into networks. The key here is that the proposed mortgage rules are likely to force a change in the distribution patterns of the mortgage market.

All the effort put into transparency has not had the desired effect, which is why I believe the Government introduced low margin products such as stakeholder. If we end up with smaller IFAs not having access to all mortgage lenders because the lenders can not afford to deal with every intermediary in the market and if bigger IFAs have reduced numbers of lenders on their panels because they can not afford to support disclosure from all the lenders, then independence is lost.

What is clear is that the industry needs to find a way of supporting the proposed individually tailored disclosure regime so that we do not see mass consolidation of the mortgage market or a move to multi-ties via reduced lender panels.

The key to achieving this is technology. There is no other way that the necessary pre sales disclosure information can be distributed cost-effectively to the consumer via the intermediary market.

Intermediaries are going to have to prove to regulators, via lenders, that they have provided the necessary information to their clients before, during and after the sale of a mortgage. They are going to have to keep detailed records as proof of their actions. If the audit trail is kept electronically, not only does it make it easier for the intermediary to monitor but makes it more accessible to lenders or the Mortgage Code Compliance Board.

I hope that the lenders see sense in delegating the work of monitoring intermediaries (but not the responsibility) to the MCCB. It is not an ideal position we find ourselves in, but I believe technology can play a key role in the future competitiveness of the mortgage market without compromising independent advice.

Jim Gaskin is managing director of The Exchange


Bill Gates: Will appeal victory turn the tide for technology?

M&G is predicting a rosier outlook for technology funds, after a US appeal court overturned a decision which could have led to the break-up of Microsoft last week.Global technology fund manager Greg Kerr says: “This is good news for the company in that it lifts the cloud of uncertainty which has been weighing on it […]

Family Assurance Group appoints Bingham

The Family Assurance Group is appointing Miles Bingham as head of marketing. Bingham&#39s new role will focus on opportunities now open to the Friendly Society following the relaxation of polarisation rules under phase one of the FSA review.Bingham is leading a marketing team focused on streamlining the sales process, and building new partnerships for distribution.He […]

IFAs slam PIA watchdog over pensions redress

IFAs have slammed the PIA ombudsman for encouraging policyholders seeking redress over pension misselling to complain in order to validate any offer they have received.A Rochdale IFA is fuming after a client was advised by the ombudsman that the “only way” to verify an offer of compensation was to make a formal complaint against the […]

AMP pays £52m for iii

AMP has bought personal finance website Interactive International Investor for £52m, making its second acquisition in two weeks.The move follows AMP’s takeover of Towry Law announced last week for £75.7m, giving it 200 RIs in the UK.AMP is offering 30p per III share, making the deal worth £52.1m in share capital. Shares in III closed […]

Allianz Technology Trust – April 2017

Welcome to the latest update for Allianz Technology Trust PLC from the Trust’s portfolio manager, Walter Price. Portfolio review The Trust’s NAV returned 4.3% , outperforming the Dow Jones World Technology Index return of 2.8%. In US dollar terms, the portfolio gained 4.8%. During the month, stock selection contributed to relative performance, and industry allocation […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm