Mortgage network membership to face FSA scrutiny

An FSA investigation has revealed there is less unauthorised mortgage business being done than anticipated but a second study is being conducted as the FSA is uncertain how many network members have correct authorisation.

A study of more than 600 firms found only 11 of those firms which should have been authorised to conduct business, following the introduction of mortgage regulation last autumn, did not have the relevant FSA approval, says Clive Briault, FSA managing director for retail markets.

Mortgage intermediaries are well-informed about the need to be FSA authorised, says Briault, and lenders are actively turning away business from advisers who they suspect do not have the correct authorisation.

That said, there were two particular issues raised by the survey, according to the FSA, which suggests networks are not keeping the FSA sufficiently up-to-date about whether their appointed representatives are authorised and this is creating confusion.

As a result, the FSA is going to conduct another investigation into network membership as part of its continuing supervisory work.

Similarly, the FSA says “a number” of mortgage introducers are describing themselves in advertising and business stationery as ‘independent mortgage advisers’ so the City watchdog has told relevant firms to update or remove such material.

While the health of the mortgage sector looks good after six months of regulation, the FSA says it will not relax its vigilance on the market and will continue to follow up leads to track down and prevent firms operating illegally.

A comparable perimeter study is now under way on the general insurance sector to weed out any problems, says the FSA.