Mortgage Advisers
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1. Preparing for TCF assessment visits – FSA Roadshows
2. FSA TCF Telephone Meeting
3. FSA website launches new ‘Financial Promotions’ web pages
4. Security of customers' data
5. Appointed Representatives – Are you including them in your RMAR?
6. FSA training – Reminders
7. Mortgages - Solicitors ‘Introducer’ or ‘Referral’ Fees
8. Offering Mortgage Advice? – You must read this carefully
9. Mortgage Effectiveness Review – 2nd stage results published
Ladies & Gentlemen
Please find enclosed the latest compliance and industry news.
As usual, sit back and enjoy!
Kind Regards
ateb consultants
Which article applies to me?
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1.
Preparing for TCF assessment visits – FSA Roadshows
As you know, the FSA is rolling out a programme of inspection visits to assess firms’ progress towards TCF. They have been in Northern Ireland recently and, next up, is the North West.
Please note that the FSA is holding free roadshows in advance of visiting any particular region. They say that firms will not have to travel more than 50 miles to attend and that the programme will cover the whole UK. The roadshows will be held approximately 12 – 14 weeks before the assessments. The FSA will write to firms that are due for assessment and will often be in a region for three or four days giving firms a choice of roadshows in more than one location.
The content of the roadshows is as follows.
- All firms will take part in an opening session covering principles-based regulation and TCF.
- Firms will then move to their allocated breakout group to work though specific TCF issues that may affect their firm.
- The roadshow will end with a closing session for all firms, bringing together key messages and issues emerging from the breakout groups.
The roadshows will be run by the FSA’s Small Firms Division. A Head of Department will lead the opening session and the breakout sessions will be run by Managers and Associates from the Mortgage, General Insurance and Investment departments.
| Ateb view: |
Very useful initiative from the FSA |
| Action required by you: |
Watch out for the invitations and book your slot ASAP. We suggest that attendance is vital. |
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2.
FSA TCF Telephone Meeting
The following notes are extracts from a telephone meeting between an advisory firm and the FSA. The meeting lasted just over an hour and was established to monitor their progress towards TCF; to start the process, an email was sent to the firm requesting the following:
- Key Procedures
- TCF ‘Gap Analysis’
- Compliance Audit Report
- Structure Diagram
- As the firm was a GI Broker, they wanted a copy of the firm’s Conflicts of Interest policy
The meeting was via a conference call facility involving 2 FSA staff. The FSA used a checklist of issues, however they conducted the interview in a conversational style. The questions revolved around the following areas:
- Background to the firm
Years trading & market place
They will ask about your recruitment selection process and how TCF is embedded with new staff members. You should be able to demonstrate strong leadership and a well managed TCF culture.
You should be able to explain how you manage / assess training needs
- Monitoring & File Checking
You should demonstrate that you are monitoring a robust risk based spread of business via your file checks.
You need to explain that you are using it and that this is documented.
They showed a specific interest in individual pure protection and personal accident & sickness policies.
- How TCF manifests itself into the firm
We suggest thinking through this one in advance and have some sort of standard answer that encompasses everything from T&C to your Sales Process. We would recommend using the ATEB ‘6 Outcomes’ document as a prompt. They are looking for you to demonstrate that you have considered how TCF fits into your firm and that you can demonstrate you have conducted a gap analysis. You should also be able to show that you are adopting the practices you highlighted within the GAP.
They will ask whether you use a compliance consultant and their levels of service. They are also likely to ask which FSA events you attended in the last 18 months?
| Ateb view: |
Worth covering, but frankly, no surprises! |
| Action required by you: |
Speak to ATEB if you are still unsure as to what the FSA will expect. |
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3.
FSA website launches new ‘Financial Promotions’ web pages
If you conduct financial promotions (adverts) then you should add the link below to your website “favourites”.
In particular, points worth noting are that the new pages include:
- A case study section with examples of issues where the FSA have taken action and why. These will be added to on a regular basis.
- Facts and figures on how the FSA regulates financial promotions and how often the FSA take action. This will be updated on a quarterly basis.
- A Thematic section for forthcoming reviews
| Ateb view: |
The FSA has completely restructured the pages so that firms can easily find important and practical information to help them with their advertising and communications. |
| Action required by you: |
You can access the FSA’s new financial promotions website at:
http://www.fsa.gov.uk/Pages/Doing/Regulated/Promo/index.shtml |
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4.
Security of customers' data
With personal data being bought and sold by criminals who use it to steal identities and commit other crime, the FSA is understandably concerned that firms have effective systems and controls to prevent data being lost or stolen.
It’s therefore important that firms frequently review their controls to stay alert to new threats.
During 2007 their Financial Crime and Intelligence Division did a thematic review of data-security controls, visiting 39 firms, including 20 small firms. They found that poor data security is a serious, widespread problem across the entire industry.
They concluded that shortcomings fall under three broad categories:
- firms not appreciating the gravity of this risk;
- firms lacking the expertise to make a reasonable assessment of risk factors and devising ways of mitigating them; and
- firms failing to devote adequate resources to the problem.
The FSA has published a specially designed factsheet for small firms. The factsheet contains practical tips and examples of good practice.
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5.
Appointed Representatives – Are you including them in your RMAR?
Did you know that information about Appointed Representatives must be included in your RMAR Returns? For example, AR staff details should be included in the T&C section and figures for business generated should be included in the P&L.
Here are some general action points that the FSA recommends for RMAR
- Take responsibility for the RMAR. Senior management and owners of firms have overall responsibility for the accuracy of the RMAR, even if they delegate its completion to others.
- When delegating responsibility for completion of the RMAR, ensure the person has enough understanding of what is needed and is competent to complete it accurately.
- Ensure you keep a copy of all documentation used to support the entries on your RMAR submissions as you may be asked to verify what you have included.
- Take advantage of the help available from the FSA rather than estimating or guessing your answers. In the first instance, use the help boxes within the RMAR and the assistance on the FSA website.
| Ateb view: |
RMARs are a prime source of monitoring information for the FSA, so you should ensure that your returns are accurate. |
| Action required by you: |
| If in doubt, discuss with your ATEB consultant. There is also useful online training available from the FSA (see article in this newsletter). |
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6.
FSA training – Reminders
There is some useful online training material available on the FSA website.
Retail Mediation Activities Return
Essential training for staff who complete RMARs.
http://www.fsa.gov.uk/Pages/Doing/training/rmar.shtml
Financial resources – calculating own funds and capital resources
This is a comprehensive guide to help you understand how to calculate regulatory own funds and capital resources. You will find out why compliance is important, how to make calculations relevant to your firm type, and how to proceed if you find you have lower financial resources than are required.
http://www.fsa.gov.uk/Pages/Doing/training/financial_resources.shtml
Client money (for general insurance intermediaries)
The client money rules are complicated. This will help you to understand the client money section of the FSA Handbook (CASS 5). The Guide to Client Money for General Insurance Intermediaries is also essential reading for staff whose jobs include client money in any way.
Course: http://www.fsa.gov.uk/Pages/Doing/training/client_money.shtml
Guide: www.fsa.gov.uk/pubs/other/Client_Money_Guide.pdf
The following is a half day workshop with a small choice of locations:
Financial promotions (for the investment sector)
This workshop is designed to provide practical help to firms, giving you an understanding of the FSA approach to financial promotions so you are equipped to review processes within your firm.
http://www.fsa.gov.uk/pages/Doing/training/fpromsinv.shtml
| Ateb view: |
None - for information only. |
| Action required by you: |
Incorporate into your training & development plans as required. |
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7.
Mortgages - Solicitors ‘Introducer’ or ‘Referral’ Fees
The FSA frowned upon these during a recent visit to small firm. The key problem we suspect was their disclosure - or lack of it!
These fees are often taken from the client’s funds by the solicitor and paid to the broker and the FSA are likely, therefore, to class them as funds paid by the client.
Here is some basic advice if you receive these types of fees in connection with mortgages that you arrange.
- These fees should be disclosed clearly.
- They should be justified for the work done.
- FSA is likely to class these as additional broker fees and they need to be appropriately disclosed within the IDD, KFI and offer documents.
- An FSA inspector specified to ATEB that he would like them included within the IDD.
| Ateb view: |
The FSA are losing patience with stealth charges and are likely to throw the ‘TCF Book’ at firms that don’t ensure full disclosure. |
| Action required by you: |
Check your sales process is both clear and compliant and that ALL broker fees are disclosed in the correct manner. |
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8.
Offering Mortgage Advice? – You must read this carefully
This article simply refers you to the latest FSA mortgage newsletter and covers:
- Senior management responsibilities
- Management information (MI)
- Monitoring
- Demonstrating suitability
- Affordability
- Self-certification
- Training and Competence
- Recruitment
- Supervision
- Qualifications and training
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9.
Mortgage Effectiveness Review – 2nd stage results published
The Financial Services Authority (FSA) has recently published the findings of the second stage of its Mortgage Effectiveness Review, which focused on consumer experiences in the sub-prime and lifetime mortgage sectors of the market. The first stage of the review, published in 2006, looked at disclosure and advice and selling practices in the mainstream mortgage market and found that things were generally working well for consumers.
The latest research found that:
- both sub-prime and lifetime consumers see the Key Facts Illustration (KFI) as an important and useful document for helping them to check points of detail and clarify uncertainties, but not for product comparison and shopping around;
- in neither market do consumers make a distinction between receiving advice or information-only, and the Initial Disclosure Document (IDD) is not prompting them to think about the level of service they might get; and
- sub-prime consumers rely to a considerable extent on their broker and accept their broker’s recommendation. Most lifetime consumers also rely on their broker.
- Both sets of consumers focus heavily on price, with sub-prime consumers concentrating particularly on initial payments.
The latest research will help to inform the wider review of the mortgage regime, announced in the FSA's Business Plan 2008/09. This wider review will consider the scope for moving towards greater reliance on principles and other high-level rules, and will reflect issues identified through past and ongoing thematic work that might point to changes in policy.
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Important Note:
The ATEB Newsletter is intended to provide general guidance on areas of compliance and T&C; however it is not a replacement for the main Rules and Guidance contained within the FSA Handbook.
We welcome all feedback. If you have any feedback or questions relating to any articles then please direct them to your local ATEB consultant or the newsletter editor Steve Bailey email steve@atebconsulting.co.uk
Unless you have consulted specifically (as part of a regular visit) with ATEB on a particular issue then ATEB Consulting accept no liability for any actions taken based on the information contained solely within the newsletter. |
Contact Us:
Ateb Consulting
The Old Post House
29 Nedderton Village
Northumberland
NE22 6AX
T: (01670) 822984
M: (07703) 576951
E: steve@atebconsulting.co.uk
W: www.atebconsulting.co.uk
