Without a doubt, the new MCCB registration rules present greater demands
and requirements. And not before time, in my opinion.
Comparing the May 2000 document with this year's new requirements, six
pages of rules have become 12 pages, and seven “definitions” have expanded
to 14. Has the MCCB deliberately doubled the content, with some masochistic
mathematical consistency? No. It is doing abso- lutely what it needs to.
When I wrote last year that it was time to “raise the drawbridge” and make
the mortgage advisory market much tougher to enter, I received several
vociferous and critical letters from brokers accusing me of “pi**ing in the
soup” by calling for tougher rules.
But for me, increasing regulatory requirements and a resultant raising of
standards is absolutely what the market needs. I believe the MCCB scored a
huge hit in hiring experienced industry executives such as Sue Scott,
formerly with Woolwich, and Richard Fox from Prudential Group who are legal
and policy director and compliance director of the MCCB. It is thanks to
such depth of industry and regulatory experience that results are being
seen. But major improvements in standards go hand in hand with increased
Here are some of the key changes contained in the new 14-page Registration
Rules document and an overview of the timetable.
This year's MCCB application form now captures additional business
information from firms, so be prepared to provide more detail. This will
obviously enable more risk-based compliance monitoring of firms.
There is a small increase in fees which is described as a result of
increased “monitoring, investigatory and disciplinary activity”.
The new rules from May 1, 2001 have been amended principally to include
the fitness and competence requirements for registered mortgage advisers
and the fitness and propriety requirements for firms.
There is a new rule which means that MCCB registration automatically
lapses if either PI insurance or a CCL is not held.
You should, therefore, make absolutely certain that your CCL is
valid/current and that PI does not lapse, as any subsequent reinstatement
of your registration with MCCB is entirely at its discretion after any
deregistration of this nature.
Fitness and propriety rules will be introduced from May 1, 2001. The only
firms who will completely escape MCCB F&P rules are those already
authorised by the FSA.
But even these will have to demonstrate that their mortgage work is
managed and closely linked with the firm's financial services operations.
All firms will, from May 1, 2001, have to meet the fitness and competence
requirements for RMA's, including monitoring exam progress against the
December 2002 deadline.
From September 2001, firms must establish “competence levels” and
introduce formal supervision procedures for their RMAs.
At end of December 2001, the F&P rules are fully implemented and all RMAs
– new and old – have to meet the requirements.
Key aspects of competence requirements
Individuals of an MCCB-registered firm wishing to train to become RMAs are
to be known as trainee advisers. Much reference is made in the rules to
competence and competent.
Rather than a draconian prescriptive approach, you may find some comfort
in the fact that you specify your own competence level, “based upon the
scale and nature of the mortgage business undertaken” by your firm.
The MCCB provides guidance notes which give helpful information on the
main training and competence requirements, including:
Establish the skills of the applicant, his or her knowledge and
experience; their understanding of regulations and legislation; assess any
training that the applicant has received; verify any examination passes.
Ensure it is relevant and up to date. A competence programme could
include on-job training, attended interviews, review of cases, role plays,
review of fact-finds, analysis of failed sales and complaints.
Unlike earlier PIA/Lautro rules, a minimum “hours per year” threshold of
CPD activity is not essential. Set internal benchmarks to be undertaken by
RMAs and trainee advisers relevant to the scale of your mortgage activity.
Make and keep records applied in assessing continuing competence.
Supervision and monitoring
Establish a system of supervision and monitoring competence, which could
include ratio of sales to offers or completions, product confirmation
letter acceptance rates following supervisor checks and administration
Intermediaries need to take the registration rules as seriously as the
code itself, as they are a fundamental part of the obligations. If in
doubt, call the MCCB helpline or take expert advice.