The FSA paper on the Mortgage Market Review PS10/9 makes gripping reading and will result in a number of people leaving the Industry.
Gone are the days when a mortgage salesperson could "duck under the radar" and hide behind their Principals
licence when advising and/or arranging regulated mortgages.
The policy statement confirms that all advisers and arrangers AND their supervisors will have to become a Controlled Function (CF31). For many existing IFA's I will hear you say "So what?" we are already a CF30 - but you will need to apply for the additional CF - and the FSA have developed an on line notifications portal to cope with the anticipated 20,000 applications. This new system needs fine tuning and should be ready to accept applications for the new CF from 31 March 2011.
The FSA will, once fully implemented, have available for public display a full list of all CF31's in the Industry. The new rules should reduce the risk of unsuitable people operating within the Industry and to make those that do fully accountable for their actions.
Those thinking of moving to restricting their activities to unregulated mortgages are in for a shock. The plans to extend the scope of the "son of FSA" in a couple of years will result in BTL and second charge loans being subject to this regime too.
Interestingly, the FSA believe that this is the right tool for reducing Mortgage Fraud.
• CF31 will not cover the functions which take place after the application by the customer for a home finance transaction unless the person concerned is also involved in the upfront sales process.
• CF31 will not apply where no new monies are advanced . So, an individual will be exempt from requiring approval for CF31 if the home finance transaction they are dealing with does not involve new monies being advanced.
Trainees are permitted to become CF31's but the Firm will need to have a robust process in place to ensure that :-
The Individual is "Fit and Proper"
Taking relevant professional examinations
Receiving ongoing supervision and coaching
Records of the ongoing supervision and CPD are up to date
There will be no need for the Firm to notify the FSA once the Trainee has been signed off as competent - but the Firm must retain records.
Firms are expected to undertake "Fit and Proper" checks on all new staff (trainees and job movers) including undertaking CRB checks. Any adverse information must be disclosed to the FSA. The FSA expect that such CRB checks are current - not than 2 months old prior to the date of the application for CF31.
Firms will need to have in place robust systems that can demonstrate compliance with these new rules - in order to qualify for the transitional arrangements.
Recruitment - referencing including a current CRB check.
Professional qualifications - where relevant
Record of supervision / coaching
Approval arrangements - competency
Appointment of CF10 - Compliance Officer
Small Firms will be required to have in place arrangements to obtain CRB checks- details of umbrella organisations that may be able to help can be found at http://www.crb.homeoffice.gov.uk/
CRB checks take anything between 2 and 8 weeks to complete - this needs to be taken into account when recruiting new advisers / arrangers.
The FSA have confirmed that it may take up to three months to approve a CF31 application - therefore it is in the interests of all Firms to ensure that their house is in order.
The Transitional arrangements will mean that applicants that meet the criteria and have the necessary paperwork submitted on time to the FSA will be able to continue to act as an Adviser / Arranger prior to the FSA "sign off".
Next steps from the FSA :
Sept 2010 - Final Mortgage Rules published and new content available on FSA Website
Q4 2010 - Modified Form "A" available in draft
Nov 2010 - Sole Traders / Single Director Firms registered with Umbrella organisations for CRB checks
Feb 2011 - Sole Traders / Single Director Firms apply for their own CRB checks
Feb 2011 - All other CF31 Firms apply to Disclosure Scotland
31 Mar 11 - Start of application period for CF31's and CF10's.
30 June 11 - End of transitional application period.
1 Jul 2011 - Anyone that hasn't applied MUST cease to undertake regulated activities unless a current CF.
1 Jul 2011 - Applications from current CF's requiring CF31 or CF11 to be submitted
1 Oct 2011 - Anyone that hasn't applied for CF31 must cease to undertake relevant regulated activities - even if a CF.
If you need help the please get in touch at http://www.compliantsolutions.co.uk/fsa-problems.php
Monday 28 June 2010
Wednesday 9 June 2010
Online Notifications and Applications
The FSA launched on Monday their new on line facility for Regulated Firms.
In essence, the FSA could not cope with the 20,000 or so expected applications from Mortgage advisers / arrangers next year with the current set up. As a result, they have developed an on line system that becomes mandatory from August 2010.
You will need to register to use the service –
http://www.fsa.gov.uk/Pages/Doing/Regulated/ona/registration/index.shtml
the facility will allow you to complete and submit changes in respect of the following :
- Approved persons
- Appointed representatives
- Passports
- Variations of Permission
- Cancellations
- Waivers
- Standing Data
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I hope that the systems that the FSA have introduced are more robust than the GABRIEL system that was launched a couple of years ago and still encounters problems.
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