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Regulation Reminders

Over the next few weeks, those nice people at Money Marketing have asked me to put together a checklist of things mortgage intermediaries need to have in place as regulation is introduced.

A kind of “Did I turn the gas off and lock the back door?” view of everything that a firm new to regulation must have in place.

Each firm has a different starting point but the FSA&#39s rules mean that the issues addressed are the same.

To start with, an issue faced by all mortgage firms is ensuring they have sufficient professional indemnity Insurance in place to meet the FSA&#39s requirements.

These are considerably different to those needed under the Mortgage Compliance Code Board regime.

It is important to note that the FSA sets minimum levels of professional indemnity cover and expects a firm&#39s senior management to assess the business risks and determine if more is needed.

For mortgages, the minimum level is either:

1: Cover per claim equal to £100,000 or, if higher, 10% of annual income; or 2: Aggregate cover equal to £500,000 or, if higher, 10% of annual income, in each case subject to an upper limit of cover of £1m.

As most firms also offer insurance, the minimum level of cover at least £1m per claim. In addition, the policy must provide a minimum aggregate level of cover of £1.5m or, if higher, 10 per cent of annual income, subject to an upper limit of £30m cover.

FSA-compliant cover must be in place by the start of regulation.

Chris Cummings is a director of the Association of Intermediaries


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