IMLA Blog: Why the FSA deserves praise

It is not often that the FSA receives praise, but I believe it has taken a step in the right direction with its distribution and disclosure consultation paper.

Overall, there are a number of positive developments in CP10/28 that will reinforce the intermediary market.

Primarily, it creates a level playing field between direct sellers and intermediaries, which is too long overdue.

Under FSA rules, intermediaries have, quite rightly, needed to ensure that their staff are fully qualified and equipped to effectively sell mortgage products to the public. Meanwhile, their direct competitors have only been required to undertake minimal training to advise on mortgages.

This is blatantly unfair.

Under the FSA's plans, direct sellers will have to adopt the same standards in the sales process and they will have to be qualified. A minimum standard for mortgage sales can only be a good thing and will inevitably help to raise standards across the industry.

In addition, intermediaries will retain their unique structural advantage, in that where advice is required they can recommend any product from any lender, which is clearly something that a borrower cannot get from the direct channel.

Yes, as IMLA rightly stated in its submission response, certain aspects of the proposals need clarification, including the single sales standard and affordability and appropriateness.

Yet, the FSA is attempting to address some important issues here and is not going to get them right straight away.

The FSA has been on the receiving end of harsh criticism from the mortgage market for a long time and it seems there is automatic cynicism and suspicion whenever it issues a new set of proposals (although, admittedly it does seem to issue quite a lot).

However, on this occasion, the intermediary industry should welcome the regulator's stance and work with it to achieve the best possible outcome.

John Heron is chairman of IMLA