Robert Sinclair AMI Director

We continue to see work taking place on the development of the new Financial Services regulatory architecture for the UK.  

The new structure, which will be in place from 2013, will see the Financial Policy Committee (FPC) become responsible for the stability of the financial system as a whole and for macro-prudential oversight and controls.

The Prudential Regulation Authority (PRA) will oversee deposit takers, insurers and a small number of significant investment firms.

The Financial Conduct Authority (FCA) will be responsible for regulating conduct in retail (including mortgages) and wholesale markets and for the prudential regulation of firms not prudentially regulated by the PRA.

Last month saw significant progress towards the creation of this new structure with HM Treasury publishing its White Paper on Financial Regulation.

The paper was followed by FSA publishing its document on the approach the FCA will take to regulation, which set out the FCA’s objectives.

These documents contained extensive proposals which will have wide-ranging consequences for both firms and consumers.

As always, our priority will be seeking to address those issues which are unintended or detrimental to members.

It is also important that any proposals are considered alongside the revisions to FSMA, and the work being undertaken at both a European and international level.

AMI remains concerned about the potential additional costs of such a regulatory structure and its approach to regulation.

In addition, we have to also consider the risk that these changes could make the UK too difficult a territory to do business in, which fundamentally could be detrimental to UK consumers.

At around the same time we also saw the FSA publish the results of its thematic review on lenders systems and controls to prevent mortgage fraud.

Whilst the report appears balanced, the rhetoric and reporting appeared less so.

Accordingly AMI will continue to discuss this with the FSA and all other interested parties to ensure that any resulting actions are appropriate and proportionate.

As ever, we would be delighted to hear your comments and concerns on these and any other issues which you feel impact the way you do business.

We will be liaising not only with HM Treasury and FSA on these topics, but various other bodies in order to ensure that our member’s views are heard and considered.

Monthly news round-up

Bribery Act 2010 reminder	Reminder about registering your Compliance Officer with OFT	The Financial Conduct Authority’s approach to regulation
Members are reminded that the Bribery Act 2010 came into force on 1 July 2011. Bribery is generally defined as giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so... Read more	In March this year the Competition Commission introduced new PPI rules which extend beyond those of ICOBS. These new rules are supervised by the OFT, not the FSA, and require registration of the Compliance Officer that is responsible for PPI within a firm with OFT... Read more	Yesterday further details of the new Financial Conduct Authority’s (FCA) approach to regulation were announced. Whilst the document does not provide any draft rules, it does give an overall summary of the approach that the FCA will take... Read more
FSA to publish new MMR consultation paper in the autumn	Research shows that mortgage borrowers’ expectations are not being met by high street lenders	Consumer Insurance (Disclosure and Representations) Bill
At Thursday's FSA Annual Public Meeting Adair Turner confirmed that the next MMR consultation paper will not be published until the autumn. Turner said that FSA must make crucial social trade-offs when intervening in consumer interests. In relation to the MMR Turner’s example of this trade off was... Read more	Research commissioned by AMI and L&G Mortgage Club into current borrower expectations and finances and the current availability and criteria of loans reveals a worrying mismatch, particularly for the 60% of borrowers who currently have less than 25% deposit to put against a new mortgage... Read more	The Consumer Insurance (Disclosure and Representations) Bill aims to reform the law on pre-contract disclosure and misrepresentation. The Bill is currently progressing through the House of Lords. It was originally presented to parliament in December 2009... Read more
FSA publishes final rules on regulatory fees
Back in February, we issued a communication detailing FSA’s proposed fee rates for the year 2011/12. FSA allocates its costs on a straight line basis within each fee block. This means costs are in direct proportion to the size of permitted business firms undertake in these fees blocks - their annual eligible income (tariff data)... Read more

Forthcoming events

Mortgage Business Expo - London
Earls Court - Olympia 2
16 - 17 November, 2011

Mortgage Business Expo 2010 delivered access to lenders, over 85 key suppliers and unique funding solutions which can be applied to exhibitor clients... Read more

For more information, log onto our events section.

Featured publication

AMI Quarterly Economic Bulletin
Volume 19 | July 2011

The latest AMI Quarterly Economic Bulletin has been published, setting out a current view of the economy, the mortgage market and housing market.

Tightening household incomes is depressing demand despite the fact it is now cheaper to buy than rent in most parts of the UK.

With interest rate rises off the agenda for some time, borrowers have little to fear in the short term from rising mortgage costs.

Each quarter our expectations for rate rises are pushed further and further back. Swap rates suggest that the Bank of England will increase rates in February 2012 but it could be even later than that now.

Figures from the Bank of England’s Financial Stability Review also show there are still significant risks on bank balance sheets, with some demonstrating substantial exposure to high and very high LTV secured debt.

Dealing with this level of exposure will make it more difficult for them to expand their balance sheets and comes at a time when they are under political pressure to lend more. We have now had three years of dealing with a fragile market.

Despite the obvious difficulties, it is encouraging that a level of stability has crept back into the market.

Economy

• 2011 GDP forecast down to 1.5%, down from 2.3% last year
• Household spending fell 0.6% in Q1, household disposable income down 2.7% year on year
• CPI reached 4.5% in April and May, although it fell to 4.2% in June

For more information on all of our publications, log onto our publications section.

This information has been prepared for the members and contacts of the Association of Mortgage Intermediaries. The information and options expressed in this document are not necessarily comprehensive and do not purport to give professional advice. If you would like specific information or assistance please call your usual contact, at AMI.

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