Association of Mortgage Intermediaries

1
Association of Mortgage Intermediaries

• Ben Stafford

2
Agenda

• Regulation, regulation, regulation
• Understanding the FSA
• What will change?
• Regulation choices
• Independent
• The role of advice?
• What's coming over the horizon

3
What does AMI do?

• Insight
• Accurate Timely Plain English
• Information
• Regulation Help Desk
• Influence
• FSA Treasury Policymakers Europe

• E-mail newsflash service
• Newsletters and analysis
• Helpdesk
• Information rich website
• Regional meetings
• Shared platforms
• Research and trends
• Elected Board
• Dedicated Team
• Application form help
• Network help
• Fact sheets

4
Understanding the FSA

• FSAs objectives
• To maintain market confidence in the financial
  system
• To promote public awareness of the financial
  system
• To provide consumer protection
• To reduce the opportunities for financial crime

• FSAs approach
• Risk based approach
• Emphasis on systems controls
• Formal control structure in all areas
• Internal audit

5
What will FSA regulate?

• Mortgages
• Advising and arranging
• Mortgage lending and administering
• Pure Protection
• Advising/arranging deals/dealing as agent/
  managing
• Assisting in the admin and performance of a
  regulated contract of insurance
• GI term

6
What will change?

• Statutory regulator
• Approved Person regime
• FSA Handbook
• Capital adequacy rules
• No grandfathering period
• Reporting systems
• TC commitments schemes
• Financial Ombudsman Service

7
MCOB

• The Final Rules
• 15th October 2003
• GI Final Rules Jan
• 337 pages 13 Chapters
• One leg of Sourcebook
• Whats news
• 1 Application purpose (who, what where)
• 2 Business Standards (Comms, inducements, High
  pressure sales, Reliance on others)
• 3 Financial Promotions (cold calling,
  advertising)

• 4 Advising Selling (WoM/Panel, Independence,
  IDD, advice, records)
• 5 Pre-application disclosure (illustrations,
  accuracy, KFI)
• 6 Offer disclosure
• 7 Disclosure start and after sale
• 8 Lifetime Mortgages Advising selling
• 9 Lifetime Mortgages Product disclosure
• 10 APR
• 11 Responsible lending (self cert)
• 12 Charges (fees)
• 13arrears possessions

8
Regulation choices

• AMI is neutral on your decision
• We represent the whole of the market
• We are non-commercial
• We are non-partisan
• You can rely on AMI

• Do nothing!?
• Direct regulation
• Appointed Representative
• VOP
• Introducer
• Criminal offence

9
Direct Authorisation

• The Issues
• Authorised firm requirements
• Approved person regime
• Financial issues
• TC requirements

• AMI Helps
• Application form
• Fact sheets
• Helpdesk
• Explaining the rules
• Guide to MCOB
• Guide to ICOB
• How to meet the requirements

10
Authorised firms

• Approval by FSA (Part IV Permission)
• Threshold Conditions e.g. incorporated firm, UK
  offices, close links, resources, suitability
  (FP)
• 11 Principles for Businesses
• Senior management arrangements, Systems
  Controls
• Apportionment of Responsibilities
• Approved Person Regime

11
Approved Person regime

• Principals and significant influence functions
  must be approved by FSA prior to appointment
• Allocate a director/senior manager
• Advisers do not fall into the Approved Persons
  Regime
• Compliance not (yet) an AP role

12
Financial stability

• Financial Ombudsman (FOS)
• 2 cases free
• No annual levy year one
• Transitional complaints responsibility
• AR complaints issues!
• By the way
• MCCB good standing
• 50 Annual levy

• Capital
• 5k/2.5 annual income
• or
• 10k/5 of income or average client money balance
• PII
• Client money rules
• NOT apply for mortgage intermediaries
• FSCS
• Supervision enforcement including auditors

13
TC requirements

• A firm must ensure
• Its employees are competent
• Its employees remain competent for the work they
  do
• Its employees are appropriately supervised
• Its employees competence is regularly reviewed
• The level of competence is appropriate to the
  nature of the business
• Role of the Skills Council!

14
Appointed Representative

• Questions
• The Cost (now and on going)?
• Culture?
• Compliance?
• Approach to business?
• Partnership?
• Support?

• AMI Helps
• Questions to ask
• Factsheets
• Listing minded to approve
• Marry in haste, repent at leisure
• But
• Commercial decision

15
Sales process

• Advice?
• Principle 9 Suitability
• Meets customers needs
• Repayment method
• Term
• Payment stability
• Discount period
• Early repayments options
• Other features desired
• But
• No least worst option

• No advice?
• Script required
• Questions about needs and demands
• Supervision
• Non qualified staff
• GI
• Must provide a statement of needs and demands
• Remember
• the client decides!

16
Independent

• Whats in a name?
• Option to charge a fee (not excessive)
• Fees Commission OK
• Impact of the menu
• Whole of market / representative panel
• AR or DA
• General Insurance

17
Over the horizon

• FSA Senior Team
• - John Tiner
• - Callum McCarthy
• MGI bedding in
• Skills Council
• N2 Plus 2
• The Menu
• Depolarisation

• Europe
• ISD DMD etc!
• 30 CPs in 2004 but 80 in 2005
• PI capacity and cost
• Regulation Creeps!