View more on these topics

John Cupis: Mortgages are also covered by FCA inducement rules

John-Cupis-MM-Peach-700.png

The recent FCA final guidance on inducements and conflicts of interest (FG 14/1) has certainly caused a stir and led to action from providers and distributors alike.

The paper is clearly aimed at the retail investment advice market in the wake of the RDR, but as I go around the mortgage market I have heard several comments along the lines of “it doesn’t apply to us”.

For the first time, however, this guidance is very explicit on what is and what is not acceptable. And while it may talk about retail investments, I believe it sets the compass on the direction of travel for all potential inducements that may lead advisers into conflict.

The paper raises awareness to all of us that in business, conflicts of interest do arise. Advisers must ensure that they are not conflicted when acting in the best interests of their clients and that they are not diverted from those best interests by providers offering inducements in the form of hospitality, training events, conferences or non-cash items such as gifts.

But let’s be clear. Advisers can accept all of the above under these new rules, but they must first consider whether it is appropriate for their business. If so, there needs to be sensible governance and systems and controls around how advisers participate in such activities in future.

If you have not got a clearly defined policy in your business on, for example, the hospitality you accept (and offer) together with a log of all such events attended, then you need to get one in place by 15 April.

In the mortgage market since the credit crunch, many lenders cut back significantly on budgets for all events across the board. But a return to some of the practices of the past will not help any of us as lending comes out of recovery. We need to ensure that a professional mortgage market, underpinned by a very sensible mortgage market review, is not tarnished by ignorance of this new direction.

In response to observations that the paper was silent on mortgages and protection markets, the FCA guidance is quite clear: “Payments provided in relation to mortgage and protection business are still subject to the Principles for Businesses including Principle 8 (conflicts of interest), and so similar considerations apply to such payments as outlined in this guidance. We expect firms to act responsibly and not attempt to circumvent this guidance by soliciting and making excessive payments for other product lines.”

The last five years in the mortgage market have been some of the worst we can all remember. Let’s make sure we keep our standards high as we transition from the past and move into a more buoyant environment with many opportunities for mortgage firms, lenders and practitioners.

John Cupis is managing director of mortgages at Sesame Bankhall Group

Recommended

Global-Currency-Forex-Money-700x450-EpSos.jpg

Global equity income lagging UK funds

The fledgling global equity income sector offers UK investors an opportunity to diversify when looking for income but the sector is currently lagging behind UK focused funds when it comes to the level of income paid out. Lower global equity income cash returns is a reflection of corporate cultures on both sides of the Atlantic, but […]

FW_KatherineGarrettCox440w

Alliance Trust increases dividend by 12.5%

Alliance Trust made a £462m pre-tax profit in 2013, up from £253m in 2012. The investment trust saw its NAV per share increase by 16.1 per cent to 516.5p at 31 December 2013 and its share price increase by almost 20 per cent to 450.1p compared to the previous year. The full year dividend increased […]

Phil-Billingham-MM-Peach-700x450.png

Phil Billingham launches compliance support ‘run by planners for planners’

The Phil Billingham Partnership has launched a compliance support service for financial planning firms. Rachel Birch is joining as head of compliance having previously served as compliance manager for a Bristol-based Paradigm Norton Financial Planning. Birch holds qualifications as both a chartered and certified financial planner. PBP director Phil Billingham says the implementation of the […]

CPD: Investment principles and risk

The latest edition of Newsbrief counts as 1 hour of structured CPD and covers the regulatory and marketplace changes which took place during February 2014. Visit the Money Marketing CPD Centre to answer 10 multiple choice questions and complete this CPD activity. Just click into your CPD Plan and you’ll find each month’s marketplace changes round-up in your activity list.

Bonds going bust? Not so fast….

In recent months bond bears have been reinvigorated, and market commentary suggesting “the end of the bond (bull) market is near” has become commonplace. We think these comments are premature. Explaining the global government bond sell-off October has seen renewed pressure on global government bonds, initially provoked by a Bloomberg article suggesting that the ECB […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com