FSA contemplates extending approved persons regime to brokers

The FSA has admitted it is considering whether there is a need to change its current approach to regulating mortgage intermediaries.

In a speech to the Council of Mortgage Lenders, Lesley Titcomb , director of small firms and contact centre at the FSA, said the regulator could extend its approved persons regime to mortgage intermediaries.

She said: &quotWe are looking at what the role of advice actually is &ndash especially given that we have found the market is characterised by consumers looking for access to mortgage products rather than seeming to need advice on them. Should we focus on ensuring that intermediaries deliver high quality advice? Or do we need to look at what consumers really want and how services with and without advice respond to that need, and how meaningful regulatory intervention may be best delivered.

&quotWe also have to look at market complexity. We have to ask ourselves what are the benefits, if any, of the complex distribution landscape we saw at the height of the market, with many thousands of different products and multiple forms of intermediary services on offer. We need to look at what lies behind this complexity and what steps, if any, could the FSA and the industry take to improve the situation to get better consumer outcomes.

&quotAnd we need to look at issues around regulatory compliance. What more can we do to ensure that… intermediaries and lenders consistently assess affordability and suitability properly intermediaries consistently and reliably act in the interest of the consumer and that intermediaries do not commit or facilitate mortgage fraud.

&quotOne possible route for us to take is extending our approved persons regime to mortgage intermediaries. This could be a way of improving standards of fitness and propriety among individual mortgage advisers, prohibiting rogue individuals from the industry, and limiting the movement of problematic individuals through the industry.

&quotWe have been fairly opaque up till now on carrying over our requirements from the Retail Distribution Review to the mortgage market. Given the number of firms that operate across both the investment and mortgage markets, some think this is inevitable. Our analysis suggests there are different underlying reasons for the problems in the mortgage market and our key priority is to address these effectively rather than just carrying over a solution that was developed with a different market in mind. But there are issues we need to explore further.

&quotAnd although we have seen issues throughout the intermediary market &ndash many of them are more concentrated in the sub-prime parts of the market. It is possible that we could resolve problems in these areas simply by looking at some of the ideas I mentioned earlier, but there is clearly a lot for us to look at here.&quot