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The usual suspects

The MCCB is expecting to play cops and robbers with rogue traders who fail to pass mandatory Cemap and Maq qualifications by the December 31 deadline yet continue to sell mortgages.

The financial services industry complains of exam overkill but the number of brokers still ignoring the deadline is estimated at around 70,000 (40,000 intermediaries and 30,000 advisers), according to the MCCB.

Spokesman Brad Baker has reassured lenders and brokers that the board is taking the matter seriously but would not give any further information on how it is planning to tackle the problem.

He says: “There will be a range of measures and monitoring processes in place but we are not ready to announce them yet – that would be like letting the suspects know what we are doing.”

The Institute of Financial Services says it has received a deluge of applications from candidates anxious to sit exams, with record numbers of calls being put into the customer services centre to register. Since October 7, it has received 1,564 entries for the bridge paper alone. The pass rate is as low as 54 per cent for the Maq and around 65 per cent for the single bridge paper.

IFS spokesman Simon Ashmore says: “The number of applications is going up but clearly a significant number are leaving it to the last minute and not allowing themselves a safety net. There are many people who have been in the industry for a long time and who already have FPC exams but the breadth of knowledge needed requires candidates to study hard.”

Mortgage Force managing director Rob Clifford says: “The £1m question is why did not they think about getting the qualifications earlier? Brokers who have been in the industry for years think they can wander into Cemap and pass from their life experience but this is just not the case.”

Lenders are anxious that the MCCB will not be able to police advisers adequately and check that they have passed the exams.

Lambeth Building Society marketing director Peter Todd says his firm only accepts business from brokers who are MCCB-regulated. He says: “Every broker has been frantically trying to meet the deadline. We set ourselves the target that we would be 100 per cent compliant before the end of December.”

If the staff do not make the deadline, they will transferred to different jobs. Lambeth is tied to Legal & General which will be responsible for making sure its staff have gained the right qualifications. But, like many other providers, Lambeth&#39s products are also sold through smaller brokers and checking that these firms are compliant is being left largely up to the MCCB.

Virgin One says it will conduct checks by cross-referencing its distributors&#39 CML numbers with its own and trust that the CML will work with the MCCB to keep it updated on who has qualified and who has not.

Newly launched Clearly Financial Group chief executive Mark Chilton believes the deadline will be relaxed. He says: “I don&#39t like it but I think this is what will happen. It is the lenders who will have to hope that the MCCB will do its job properly. I suspect it is going to debar those who have not passed the exams and there are a number of small brokers who will end up not having passed but up until now it has only been involved in debarment over disciplinary matters like misselling.”

He divides the group still left to sit the papers between members of big organisations with compliance departments that will ensure staff pass in time and smaller firms which he thinks may have decided to contract out mortgage work.

Chilton says: “As for the remainder, of course, there are those who are too stupid to see the oncoming train. But there are also those who are always looking for another way to be unregulated. These are advi-sers who may have already failed to pass the FPC 1, 2 and 3 papers and so have sought out other areas to work in.”

Along with other unregulated niche products such as secured loans and second mortgages, Clifford now believes buy to let will attract those who have failed to pass mortgage adviser exams.

He says there is so much apathy in the broker market that he would not be surprised if some people woke up on January 2 hoping it was all a bad dream. But he is convinced that the deadline will not be moved and expects to see many brokers switching to offering advice only.

Clifford says: “The distributors are not just going to shut up shop in January and my suspicions are that the MCCB already has its compliance teams visiting some of the small to medium-sized brokers, building a risk profile of each one. There is a big difference between the vanilla market and offering consumer advice and recommendation.”

He believes that the brokers most at risk are the small traders – the one-man-band operations or firms with only three or four RIs – but thinks that lenders have a crucial part to play from a commercial perspective.

“Personally, I am cynical about this need to escape being qualified. I predict that hundreds of brokers will say they are providing information from 3.1a of the mortgage code and not 3.1b — offering advice that would be compliant. It is very hard to draw the line between the two and the danger is that most are in the business to give advice,” adds Clifford.

Chartered Insurance Institute marketing director Steve Wellard says the CII has made is as easy as possible for Maq candidates to take the exams by offering extra sessions and even online modules and will continue to offer these options beyond January if necessary.

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