Mortgages Direct has reported that some of its consultants have considered moving to competitor brokers who appear to have a more ‘casual’ approach to compliance, to ‘make their job easier’.
Peter Gladdy, Director of Mortgages Direct says: “We’re extremely concerned that several of our consultants are considering taking up positions at other mortgage and insurance brokers because the companies do not take compliance as seriously as we do. By not sticking to the regulations, brokers may be able to offer consultants an easier life - but they will be trading illegally and doing their clients a disservice.”
Mortgages Direct ensured its systems and processes, in the run up to Mortgage Day were fully compliant with the FSA rules. However the following are several common examples of taking the ‘easy road’:
1. Not issuing Initial Disclosure Documents and / or making full disclosure statements at outset.
2. Providing Key Facts Illustrations, or some other form of written illustration, before “knowing their customers”, i.e. completing a full Client Review (fact find).
3. Failure to provide a Statement of Demands and Needs, especially in the case of pre 14th January pipeline business, prior to completion of the regulated contract.
However, Gladdy believes that Mortgages Direct’s systems and processes will be similar to all other approved intermediaries: “There is no reason why our processes should be anymore demanding than any other brokers – if they’re compliant. We, like the majority of the industry, are committed to the FSA’s regulations and providing the highest standard of advice to our customers, but it seems that the same cannot be said for a number of our competitors, including some very large high street names.”
The FSA is actively checking that mortgage businesses are adhering to the regulations through mystery shopping schemes. Any company that is caught out could face a hefty fine or even be closed down, meaning that their consultants’ jobs could be at risk.
Gladdy adds: “Homebuyers could also find themselves in trouble. One of the main reasons for having regulation was to provide protection for people taking out a mortgage. If they’re unwittingly using a non-compliant broker or lender, they could lose their fees, mortgage application and potentially their house purchase could collapse.”