Mortgage experts are concerned that many com-panies which have outsourced compliance believe that they will not be liable for any regulation breaches after M-Day.
Mortgageforce managing director Rob Clifford warns that far too many brokers who have outsourced their compliance to independent consultancies believe that if any breaches are found, the FSA will pursue the consultancy and not the firm.
Although a firm may have grounds for a civil action against a compliance firm if they believe they have been given bad advice, the firm itself is wholly responsible for ensuring that it meets compliance requirements.
There are around 4,000 firms looking to become authorised and Clifford estimates that as many as 2,000 of these firms have outsourced some of their compliance to independent consultancies.
Clifford says: “Firms have to realise that they are the regulated entity and they are responsible. You may have a civil case against a consultancy but pursuing this would be fraught with problems because of the nature of many contracts.”
Purely Mortgages chief executive Mark Chilton says: ” The primary responsibility is with the firm. It may have a compliance officer responsible for the day-to-day management of affairs but the directors are always liable.”