Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
I know that The Outlaw waits with a real sense of expectation for the FCA Annual Business Plan. He sits on the highway in Stratford hoping to loot an advance copy to satiate his appetite to lambast the regulatory hierarchy. This year he was roundly disappointed – no traffic in or out of the aptly named “Endeavour Square” (could try harder) as the FCA continue to work from home due to Covid.
The Plan, once published, took a new format and direction. It was long on theory, rhetoric and promises of change but no detail on the what, who, where or when. With the ghosts of the failures of London Capital and Finance, Connaught and Woodford still haunting the entity it does not bode well. Indeed, there was a real expectation amongst regulatory specialists in legal firms, consultancies and trade bodies that we would get some meat on the bones of their Transformation Programme. There was a mention but nothing to tell us what is happening, how it might impact firms or advisers, any milestones or when we might reach the end.
The promise of being a data led regulator sounds impressive – but what does it actually mean? No detail on what new data would be sourced, how it might be used or how its use would have prevented the aforementioned firm failures. With the combined costs of FCA, FOS and FSCS nudging £2bn per annum, the industry expects greater clarity.
As the FCA struggles to find its new identity under Nikhil Rathi, it is important for the mortgage sector to call out some issues. We have a highly competitive market with relatively low levels of consumer inertia. Not perfect but in the top quartile. Providers and distributors work well together and consumers are well served, with good options and improving use of technology. The lack of any apparent recognition of this is what worries the industry. We want this FCA to be better than the previous incumbents.
In paying £19m per annum in direct FCA fees, it is very hard to see what the mortgage intermediary sector is getting for its money. Few firms have the benefit of a direct supervisory relationship. Firms have no concept of who the individuals are that are in the “portfolio” supervision team. The mortgage policy team have become similarly quiet since MCD. They have been active on prisoners and other areas but not with a very public face. There was nothing in the plan.
The reality of the lost and stolen laptop debacle is that the FCA lost 188 laptops or tablets in 2021 whist working from home. Rather careless. Reality is the FCA had a policy of repairing “broken” technology that meant individuals would have to send it in without a replacement. The only way to get a “new” item was to report it lost or stolen. So a badly constructed policy has led to a headline that belies reality. To firms that is a one way street on culture.
The April fees consultation added a new fee class, A22, to cover the management of appointed representatives. We were hopeful the annual plan would provide the detail of why and what was to be done. But again not a mention. A new fee class created and £7.5m levied and no activity specified in the plan.
As we move to a new academic year they must try harder.
Robert Sinclair, AMI Chief Executive