In harmony with painting magical solutions to perpetual problems, in June 2010, the FSA offered up one of the agreed quick wins from its nascent Mortgage Market Review by delivering near-final rules on a registration process for all mortgage advisers.
As the regulator encountered increasing problems and then became mired in its transformation into the FCA, this proposal was left on the back burner, not seen as urgent as both brokers and banks were subjected to enforcement processes. Direct action was prioritised ahead of longer-term controls.
With the recent Banking Reform Act and the consultation on a new senior managers and certification regime for banks, both Parliament and the regulator appear to have spoken on where they consider the most serious risks to persist.
Strict controls over how banks create, market and sell products now require board-level oversight and review over all aspects of the operation.
In imposing these requirements the Parliamentary Commission on Banking Standards has made clear that the risks sit within firms that manufacture products and are exacerbated when the same institutions also sell these directly to consumers. From the commission’s silence on intermediated markets it must be assumed that it sees lower risk in these.
The July 2014 consultation on Strengthening Accountability in Banking: a New Regulatory Framework for Individuals, is not only totally silent on what controls on intermediaries might be required but also makes no reference to the proposals from 2010. These have done a disappearing act. It must be assumed that Government, having decreed that the controls should be at bank level, feels no further regulation is required.
The debate must now be whether the industry sees value in a wider set of controls that encompasses all, particularly direct sellers, who the law states present the clearest risk. How can we ensure those that do damage are excluded forever?
Robert Sinclair is chief executive of the Association of Mortgage Intermediaries