Robert Sinclair is chief executive at the Association of Mortgage Intermediaries (AMI)
As a responsible trade body, AMI has always wanted an effective and efficient regulator.
In the FCA we have in the past enjoyed an open and participative approach built on mutual trust. The MMR and FSCS funding consultation being two shining examples.
In support of FCA we have always had outstanding access and very open discussions. Accordingly, it was no accident when, in a meeting between senior AMI and FCA executives in mid-September, we raised whether the culture at the regulator was effective or perhaps in need of attention.
The feeling we took away was that our concerns were not recognised. Perhaps an organisation where the leadership sees the need to simultaneously change both its internal culture and the industries at any price.
Not surprising to us then for November to bring an internal FCA memo citing unsatisfactory staff drinking, theft, bullying and defecation.
For an organisation to need to issue this to 4,000 staff speaks volumes. Clearly so widespread it needed general circulation with tacit acceptance that if the story got out it was an acceptable risk. The opposite would infer that management had lost all judgement and control.
Jeff Prestridge's article in the Mail on Sunday on 17 November based around this set out the case and pertinent arguments with clarity. It included quotes from the recruitment site Glassdoor: "so much posturing, positioning, jockeying for favour, building fiefdoms and ineffective at regulating markets".
There are many people who are long standing excellent regulators and supervisors at the FCA. Some I know well have felt impelled to walk away from projects in frustration at the agenda being pursued, whilst senior people appear to ignore the risks elsewhere in the landscape.
This is just not good enough. The industry pays for this regulator and it is failing good firms by addressing issues in the wrong way and ignoring poor industry behaviour by focussing on innovation and re-engineering markets at the expense of applying proper control.
Resource allocation and prioritisation is a genuine executive skill. There have just been three new board appointments and they really have to get under the bonnet of the organisation and find out what is really going on. It is not enough to sit in meetings and be presented to through the filters of PowerPoint and management controls.
This is a job where walking the floor and really listening to the staff on the ground is the only answer. With these obvious signs of organisational distress, one wonders what has been happening within the internal whistleblowing process and the investigations which should have resulted.
AMI raised these issues out of genuine concern for a well-focussed regulator that gets to the heart of issues quickly. We remain concerned about prioritisation of change agendas ahead of applying proper controls over their rules and ensuring integrity through sound on the ground market intelligence and hard supervision.
The firms who pay and the consumers they protect expect standards of the utmost integrity.
The Complaints Commissioner has been finding against this regime too often recently, with limited acceptance of those findings. Some humility and less hubris might be order of the day.
The price of “free”dom
In the past I have been critical of the marketing by lenders of “free valuations” and “free legals”.
News is reaching me again of significant delays in purchase and remortgage cases as the service provided through some conveyancers are at crisis point. I remain confused as to how this can occur.
The lender offering the incentive must know the volume of business they are looking to attract and should have planned with their supplier that they have appropriate resources.
That we end up with the customer, broker, lender and conveyancer all involved in chasing and frustrating phone calls is a total waste of time, emotion and resources.
I have always considered these incentives as a potential conflict of interest. A valuation is never free, as the lender will be paying the surveyor because they will want to rely on that to indemnify their loan.
It is also for the lender not the customer and should be more transparent as such so the customer understands it is just to underpin the lending decisions and should not give them comfort as to the whether the property is worth the amount being paid. Similarly, where the lender is selecting the conveyancer, they are conflicted and there has to be clarity is whose interest the “solicitor” is acting.
Always better has to be a “cashback” offer to fund the legals. Where we keep having the recurring nightmare of conveyancers caught in delays so seeing customers reverting to SVR in their existing deal or risking missing exchange and completion, the compensation risk must sit with the lender who has incentivised this poor outcome.
In making the constructive risk decision to offer this incentive any regulated entity has the be in proper control of its delivery chain. I hope those lenders looking to augment their product with add-ons work a bit harder to ensure that the incentives work as such and not against the customers best interests.