Get the facts straight about mortgage regulation

Written by Society of Mortgage Professionals chief executive Richard Fox, the fact file explains how the conduct of mortgage business is regulated, with respect to both lenders and intermediaries.

Richard Fox says, "There are still some who are struggling to come to terms with the new regulatory regime. It's not only about understanding the Mortgage Conduct of Business sourcebook (MCOB), but also the practical application of the FSA's Principles for Business. This extends to senior management responsibilities, systems and controls, money laundering rules and dispute resolution, as well as meeting the training and competence requirements.

"Practitioners must understand these areas and the fact file is designed to provide an essential guide to both the regulatory regime and the reporting requirements."

The fact file summarises the current position as follows;

Regulation of the conduct of mortgage selling by the Financial Services Authority began on 31 October 2004. From that date all firms wishing to continue to sell mortgages are required to have authorisation from the FSA. The FSA rules specific to mortgage business are contained in the MCOB. The rules contained within MCOB cover:

- the general conduct of business standards;

- the rules applicable to financial promotion;

- advising and selling standards;

- the various disclosures to be made to customers at particular stages of the process;

- the additional requirements for both selling standards and disclosures where a lifetime mortgage is being advised upon.

MCOB also details with examples the disclosure documentation to be provided to the customer.

Firms regulated by the FSA have to comply with all of the requirements set out elsewhere in the FSA Handbook. Sections of the Handbook deal with training and competency, money laundering and dispute resolution and also detail the way in which the FSA operates as a regulator of the market. These aspects are covered in the authorisation, supervision, and enforcement manuals within the Handbook. A shorter, tailored version of the Handbook sets out the key areas applicable to registered mortgage businesses.

Regulated firms are required to report to the FSA on their activities at defined intervals, the length of these depending on the size of the firm.

The fact file is available, free of charge, to members of the Society or the CII and to subscribers via the CII Information Services website at A summary is available on the public area of the site.