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Know it and show it, warns regulator

The FSA says mortgage intermediaries have only a “patchy” knowledge of regulatory issues in many areas despite a relatively smooth transition into a regulated environment.

At Mortgage Expo Manchester last week, FSA head of supervision Andy Watson said the regulator is concerned that mortgage intermediaries’ record-keeping standards are not as comprehensive as they should be.

He cautioned that they must be able to display detailed records on fact-finds and suitability. “You may be doing everything you say but you must be able to show it,” he said.

The FSA has just completed a mystery-shopping exercise looking at the advice and sale of lifetime mortgages with the results due out next week. It is also looking closely at self-certification, sub-prime and debt consolidation. Watson denied that the original investigation in February 2004 into self-cert was incomplete and said it was merely a natural follow-up to its findings last year.

Other areas of concern highlighted included the role of introducers and compliance consultants. Watson said there is confusion over what an introducer can and can- not do and how detailed the information from an introducer has to be.

He also urged caution for firms hiring the services of compliance consultants and advised any mortgage firm looking to use a consultancy service to make sure it is registered with the Association of Professional Compliance Consultants.

Watson warned: “There are some good ones and not so good ones. Remember to take references and choose a consultant carefully. Some less reputable consultants are using major scare tactics to get their foot in the door. The FSA takes its enforcement very seriously and any breaches will be dealt with in the appropriate manner.”

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