On 7 May 2019 the Ministry of Housing, Communities and Local Government published these new guides.  AMI has been is discussion with MHCLG during the creation of these and since publication.  We have asked for alterations to the documents some of which have been refused.

We are advising our member firms of the content of these documents as they may be unaware of the potential impact.  Within the text there a number of embedded links to a membership-based consumer charity.  When taken to the linked pages users will then be offered the option to talk to one of the mortgage advisers in their connected commercial arm.

We have asked for sight of any due diligence, tendering processes or internal approval processes, but have not had this shared.

We will continue to raise our concerns over this implicit endorsement of one advisory firm over others and lobby to have this changed.

Robert Sinclair, AMI Chief Executive said:-

“We are extremely disappointed at the approach taken here on what are an otherwise excellent series of documents.  However, we cannot support or endorse the promotion of one advisory firm, even indirectly at the expense of others.  AMI has always championed a level playing field on all matters and will continue to do so.

We hope that MHCLG will reconsider their approach and move to a more balanced position.”

https://www.gov.uk/government/publications/how-to-buy-a-home

https://www.gov.uk/government/publications/how-to-sell-a-home

The Financial Services Compensation Scheme has today confirmed its plan and budget for 2019/20. Mortgage brokers will see a significant fall in the amounts invoiced by the FCA this year, as they will no longer be paying towards pensions and investment claims which are estimated at £175m this year.  All intermediary classes will also gain from the provider contributions now coming into force.

This year’s levy for mortgage claims is estimated at £5m, but only £4m will be levied on brokers as the remaining £1m is paid by lenders.  It is positive to see the claims level fall from £25m paid by mortgage brokers last year.

Robert Sinclair, Chief Executive of AMI said:

“This has been a two year journey to achieve a fairer outcome for all mortgage brokers and it will have a significant impact on this year’s fees.  This was a significant win for AMI who were often the only entity arguing for these new and fairer class allocations and for the new 25% provider contributions.”

TSB has agreed to sponsor the Association of Mortgage Intermediaries (AMI) dinner to be held on 20^th June this year at the Sheraton Park Lane in London.

The annual summer networking dinner with top ranking entertainment continues to attract over 300 attendees from the mortgage lender and advice sectors.

Roland McCormack, TSB’s mortgage intermediary director, said: “We are delighted and honoured to be sponsoring the AMI dinner. The work Robert and team do on behalf of brokers is vital in ensuring we have a strong and vibrant Intermediary sector, focused on giving quality advice and product choice to customers.”

Robert Sinclair, chief executive of AMI said: “I am really pleased that TSB has become the second ever sponsor of the AMI Annual Dinner.  As a significant challenger Bank who are keen to be at the front of innovation and change in the market and as passionate advocates of the intermediary, it is great to have them supporting our main event in the mortgage calendar.  The AMI Board is delighted to welcome the partnership with Roland and the team.”

After 15 years, AMI and Santander have agreed that it is the right time to find a new sponsor for the AMI Annual Dinner.

Robert Sinclair, AMI Chief Executive said

“I and the AMI board are exceptionally grateful for the generous support the team at Santander have provided over the last fifteen years.  This has been a significant commitment by a lender which has always shown tangible investment in the intermediary sector.  We are now moving into a new era, but will always recognise what this sponsorship delivered, particularly as we became established as an independent trade body. A big thank you to Miguel, Brad and the team.”

Brad Fordham, Managing Director of Santander for Intermediaries said

“This was not an easy decision, but the right one for both organisations now.  We will continue to support and work with Robert and AMI on industry and policy issues as we always have.  This gives other lenders the opportunity to support one of the key dinners in our industry.”

Last week the FCA proposed increasing the compensation limit of the Financial Ombudsman Scheme (FOS) from £150,000 to £350,000.  AMI strongly opposes this significant increase.

By more than doubling the compensation limit the FCA has lost sight of both its own and FOS’s purpose.  FOS was set up with a £100,000 limit and raised to £150,000 in 2012 in line with inflation.  Its purpose was to cater for cases that could be dealt with speedily and by using dispute resolution techniques to gain agreement.  Cases above these levels were deemed to be more appropriate for legal decisioning in courts based on contract law.

Robert Sinclair, Chief Executive of AMI said:

“Accessing dispute resolution for such significant cases on a fair and reasonable basis rather than a proper legal dispute procedure through the courts is just inappropriate.

Just because there are examples of higher claims being paid out does not warrant a radical increase to the FOS limit.  Even most of the respondents who agreed to the extension of FOS eligibility to include larger SMEs did not support an increase to the limit, with only three suggesting that it should be that high.  Relying purely on data analysis is not a sufficient justification.  It was always considered that higher value disputes with complex arguments should be the subject of legal remedy rather than FOS.

AMI will respond to the consultation accordingly and we encourage individual firms to do the same.”

AMI is deeply concerned around the FCA’s approach to the changes to the Financial Ombudsman Scheme (FOS).  This week the FCA confirmed it will extend access to FOS to include larger SMEs.

The FCA announced that respondents had “strongly supported” this extension of FOS. There were 65 responses, 13 of which raised fundamental objections to extend the eligibility.  There has been a failure to recognise that most of these were raised by trade associations who respond on behalf of their members and represent their respective sectors.  We consider that the voices of and the fees paid by mortgage and protection advisers; investment and financial advisers; asset, consumer and motor finance providers; general insurance brokers; life assurance and wealth management firms; wholesale insurers and reinsurers; electronic money issuers; and debt collection companies are not insignificant.  We also believe that the claim to have received agreement from the “significant majority” is misleading, particularly as a fifth of those who agreed were from individuals or SMEs themselves.

Robert Sinclair, Chief Executive of AMI said:

“By diminishing the pushback to this extension it is apparent that the FCA had already decided it was going ahead with its proposals and has tried to find the justification.  To take the number of responses into account rather than who they represent is a skewed approach to analysing feedback.

The minutes from the FCA’s Board meeting in July, published nearly a week before the policy statement, show that this was not even a consideration in their decision.  It has never been intended that those acting for business or professional reasons are afforded the same protections as consumers.  However we are moving to a world where the regulator considers every area of ‘harm’ as their responsibility and that it is easier to simply widen its scope rather than address the issue directly.   Accessing dispute resolution on a fair and reasonable basis rather than a proper legal dispute procedure through the courts is just inappropriate.”

AMI has responded to the FCA consultation on creating a new Global Financial Innovation Network comprising international regulators. The proposals set out the functions of the forum and the introduction of a global sandbox.

It however omits fundamental information, particularly the costs of the GFIN and how they will be apportioned to firms.  The FCA is legally required to undertake and publish a cost benefit analysis (CBA) before proposing or amending rules with CBAs having been historically included as part of any consultation, on the basis that the regulator has considered them to be “about transparency” and “an important part of the FCA’s accountability framework”.  For such significant proposals to lack any estimate of costs and whether they are proportionate to the potential benefits contradicts its commitment to transparency and the overall requirement to be transparent.

In publishing this paper the FCA referred to these proposals as following an initial consultation in February 2018 to which 50 responses were received.  However we have been unable to locate this “initial consultation” on the FCA website nor does it appear to have been made public to fee-paying firms.  It is AMI’s view that this has been developed on the basis of limited discussions with ‘innovative’ firms.  The FCA’s 2018/19 Business Plan, published in April, stated that “last month we invited stakeholders to share their views on what a global sandbox could look like; there is a lot of interest in the idea of cross-border testing and the benefits this could bring”.  This is the only prior public reference to its work on a global sandbox.  AMI has asked the regulator to publish its “initial consultation”, a list of the 50 ‘respondents’, and the stakeholders involved in these working groups (including the proportion of authorised and non-authorised firms and the percentage that these firms contribute to the FCA’s fees).

Robert Sinclair, Chief Executive of AMI said:

“We are concerned that the FCA continues to expand its innovation agenda by expanding its remit and objectives, and inappropriately allocating resources with a disregard for the firms that fund it.

The FCA is expected to focus on relevant consumer and market issues, so helping overseas technology firms become authorised in the UK should not be a priority.  It is already being anti-competitive with its existing sandbox as it gives dedicated regulatory support for some unauthorised firms (paid for by industry) whereas regulated firms have only the FCA call centre as a point of contact.  To extend this cross-subsidisation of costs on an international scale is inappropriate for a domestic-facing regulator.  The global sandbox will only benefit the firms that are in it and the FCA’s reputation for facilitating innovation.

We are seeing a regulator that is less transparent and less willing to listen to feedback.  This is a consultation in name only and we think that these proposals have been developed with selected stakeholders, with discussions mislabelled as consultations, and will no doubt continue to be implemented without any consideration of costs or industry feedback.”

Our response can be found here.

AMI has responded to the FCA consultation on a new directory which will continue to show Appointed Representatives after the Senior Managers & Certification Regime has been extended.  This meets the requirements set out under the Mortgage Credit Directive.  AMI supports the addition of mortgage advisers to this list to enhance transparency for firms and consumers.

AMI has identified a lack of co-ordination between related consultations and the duplication of remit.  The Work and Pensions Select Committee asked the FCA to improve its register, specifically to ensure that consumers could check if a firm or individual has had their permissions restricted or suspended.  The FCA is however proposing to go further than these recommendations by creating a tool for consumers to find advisers even though this facility is already provided by the Money Advice Service (MAS).

Robert Sinclair, Chief Executive of AMI said:

“We are concerned that the FCA appears to be working in siloes both internally and distinct from organisations it’s supposed to be collaborating with.  There is a risk of a waste of resources.

AMI perceives that there is a regulatory view that MAS is a third party on par with a commercial firm, whereas MAS is a statutory body funded by industry in the same way as the FCA.  The memorandum of understanding between MAS and the FCA commits to “minimise inconsistency and duplication and to promote coordination” by “working together on information aimed at consumers”. We would have expected the FCA to consider MAS’s existing retirement adviser directory rather than the duplication set out in these proposals.  The FCA should have also consulted more widely before adding this function to the current register.

These proposals directly cut across the Mortgages Market Study work on broker choice published in May 2018, and we are asking the competition team to reconsider their plans given this directory consultation published in July.  The new directory will show a list of all advisers, including mortgage advisers, and the information that will be displayed addresses most of the issues raised in the market study.  Firms shouldn’t be asked to pay for two pieces of similar work running side by side. Our view is that the new directory should stop at the point of outlining firms’ permissions and any search facility to find an appropriate adviser should sit within the adviser directory held by MAS and its successor.”

Our response can be found here.

AMI has announced details of its Board elections which will take place in November. As part of being an open and transparent body, which is fully representative of its members and their interests, the period for nominations for certain Board positions has now been opened.  These are part of the process where all Board positions are re-elected on at least a three-year rolling cycle, although existing members of the Board may stand for re-election.  This year’s Board elections will take place in the National firm constituency, the Network constituency and the Club constituency.

Any AMI member firm who falls under one of these constituencies can nominate a member of their senior management team to stand for election.  To stand individuals must complete a nomination form and be nominated by an AMI member from within the same constituency.  Nomination forms must be returned to AMI by 29 October.

Should more than one AMI member want to stand for the Board, a contested election will take place.  Those individuals standing will be required to submit a biography and an election manifesto to those constituents eligible to vote.  Ballot papers for a contested election will be sent out by 12 November.

The results will be announced on 30 November.

Robert Sinclair, Chief Executive of AMI, commented:

“The AMI Board plays a vital role for the organisation in providing direction and policy guidance to AMI’s activities. Members wishing to serve as AMI Board members must be committed advocates of the intermediary distribution channel and prepared to represent not just their own constituents but the entire mortgage intermediary profession.  We hope AMI members will want to contribute to the trade body’s work and shape our ongoing agenda by standing for election.”

AMI members who wish to stand for election to the Board and are in any of the above constituencies can request a nomination form by e-mailing info@a-m-i.org.uk.  National firms are classed as having over 100 advisers.

AMI has submitted its response to the interim report which set out the FCA findings and the way they would like to see the market develop.  AMI has been involved in numerous meetings, discussions and debate with the market study team, our fellow trade bodies and a wide range of market participants.

Robert Sinclair, Chief Executive of AMI said:

“Our main concern with this report has been the focus on price without any validation of the quality of the advice or whether the “cheaper lenders” have the capacity to handle the business assessed.  AMI were strong supporters of the move under MMR to a wider definition of suitability and remain concerned that this report ignores these fundamental market improvements.

We are keen to support a tool that allows consumers to access a database of brokers and see what services are provided in a useful way.  The Money Advice Service Retirement Adviser Directory already provides this for pensions advice and it was originally intended to extend this directory to include mortgage advisers.  In addition, the FCA is consulting on its own Directory of Advisers.  We will liaise with the FCA and the Money Advice Service to consider if these or other approaches would provide the most effective solution. We are however struggling to identify “quality measures” which would fairly differentiate between advisers.

On the work to improve eligibility criteria we are firmly of the view that initiatives in the last 12 to 18 months have moved this agenda forward significantly.  Intervention now may limit or slow innovation, therefore we are keen to avoid making changes of the type suggested.

We are aware that our fellow lender trade bodies are working with their members on improving the situation of mortgage prisoners and hope that the plans deliver an overall improved position.

We will continue to work with the FCA over the coming months to ensure that any proposals meet the needs of consumers and work effectively for all market participants.”

Our response is can be found here.

AMI recently surveyed its membership to ascertain how intermediaries are using the “free legals” services offered by many lenders.

In response to a series of questions brokers told us that 73% only recommend free legals on remortgage; 19% on both purchase and remortgage; and 8% do not recommend free legal based products.

82% of brokers told us that the service delivered by “free legal firms” is worse or significantly worse (52%) in comparison to a customer’s own choice of solicitor/conveyancer.

57% preferred a cash-back option (26% preferred products with free legals).

71% of those responding indicated that they were experiencing delays and issues with those providing free legal services.

75% of intermediaries thought that lenders or builders should not offer “free legals” as this is too great a conflict of interest.

Respondents commented “the standard of service is generally poor”.  “Lenders are aware the service is abysmal but they still continue using these firms and that is reprehensible”.  “Not able to get through by phone, missing completion dates – terrible”.  “Firms don’t have one legal adviser dealing with a case, it’s whoever picks up the phone…post is regularly lost… I have to warn the client the process will be bumpy”.  “I prefer cashback products then I can choose which remo solicitor we use.”  “Certainly on a purchase a client should choose their own legal representation.”

Robert Sinclair, Chief Executive of AMI said:

“This survey raises a number of questions on the effectiveness of the free legal services offered to many consumers.  It is clear that the significant majority of brokers would prefer a cashback option where lenders feel that they wish to incentivise aspects of their products.

AMI thinks that all lenders should reconsider their offering of free legals particularly addressing the potential issues of conflict of interest and the quality of service being provided by the firms with whom they have partnered.

AMI will be talking to their lender trade body contacts about these findings.”

AMI welcomes the FCA’s view that the mortgage market is generally working well, that most consumers are switching and that the value of intermediaries is recognised.  We are also pleased that the FCA found little evidence of commercial arrangements causing material harm for consumers and no existence of commission bias, which is consistent with its previous findings four years ago.

Robert Sinclair, Chief Executive of AMI said:

“We are pleased to see agreement that the issue of mortgage prisoners, whilst smaller than anticipated, is now acknowledged as significant.  This needs to be tackled and we would like to see lenders taking a more pro-active approach.  In addition, the report provides evidence of the scale of product transfers business which remains unreported.  As it now clearly comprises more than a third of the market, we think that UKFinance and the FCA need to gather and publish this data to reflect its significance.

We are happy to work with lenders to help them meet the existing rules on lenders openly publishing criteria to assist in the Decision in Principle process.  We are however concerned about the view that the advice and suitability rules are hindering consumer choice.  Any dilution of the rules to facilitate online solutions will need careful assessment as the Mortgage Market Review rightly recognised the need to establish, through advice, the suitability of a mortgage for a customer.  The FCA has always stressed that suitability is not price-driven so this is a significant attitude shift.  Anything which will dilute the opportunity for consumers to benefit from advice runs the risk of moving the industry and consumer protections significantly backwards.

We are keen to support a tool that allows consumers to compare the service provided by brokers.  The Money Advice Service already provides this for pensions advice and it was originally intended to extend this directory to include mortgage advisers.  We will work with the FCA and the Money Advice Service to consider if this or other approaches would provide the most effective solution.”

AMI is delighted that the FCA has listened and agreed with our arguments for a fairer arrangement for mortgage brokers.  From April 2019 mortgage brokers will no longer have to pay for the mis-selling of personal pensions and investment business.  Instead pure protection will form part of the general insurance distribution class.  In addition, all intermediary classes will now benefit from a 25% contribution to costs.

This has been a two year journey to achieve a fairer outcome for all mortgage brokers and it will have a significant impact on the fees levied from 2019.

Robert Sinclair, Chief Executive of AMI said:

“The senior management of the FCA listened to our logical arguments and agreed that these changes were sensible.  We believe that these amendments to the funding of the FSCS should deliver a more balanced industry in the future.  In resisting strong lobbying from the provider community, the FCA has stood up in support of smaller advice firms.”

It is with great regret that AMI has accepted the resignation of its Chairman Pat Bunton as he has stepped down from his role at London & Country mortgages.

This will put in train a process for the Board to elect a new Chairman from within in accordance with the membership rules.  London & Country will nominate a replacement to the Board in due course.

The day-to-day work of AMI will continue through its employed executive team.

Robert Sinclair, Chief Executive of AMI, commented:

“I have had the distinct pleasure of working alongside Pat as AMI Chairman for just over five years, in addition to the period before that when he was a fundamental part of the team that extricated AMI from AIFA.

Pat has been a passionate advocate of consumer-focused advice and the role that advisers play in delivering great results to the UK population.  He has given his time and considerable expertise and knowledge for no reward other than knowing he was doing the right thing.  The intermediary sector owes him a great debt for the work he has done on MMR, mortgage prisoners, the ongoing competition review, revision to the Compensation Scheme and a regulator that listens to the mortgage advice community.

In addition he has delivered a financially robust independent trade body which is respected at the highest levels within the regulatory community.  His input will be missed by the team, the Board, the FCA, Bank of England and Treasury.  These will be big shoes to fill.

I would also like to thank the team at L&C who gave us Pat and his contribution without ever counting the many hours we took up.”

The FCA has today issued a further consultation on reviewing the funding of the Financial Services Compensation Scheme (FSCS).  This follows on from its consultation paper issued December 2016 and a series of roundtable discussions and meetings which AMI has been involved in over the last year.

Over the last two years AMI has argued for much needed reform, which we set out in our response in March, with the right solution involving a restructure of the FSCS classes to ensure greater affinity across the product classes.  With the majority of claims in the life and pensions intermediation class relating to mis-sold SIPPs, it is grossly unfair that mortgage firms as the primary writers of life insurance have been paying a disproportionate amount of investment advisers’ invoices despite no connection between the two business lines.  We are pleased to see that the proposals have been revised so that the FCA is now consulting on moving pure protection intermediation from the Life and Pensions funding class to the General Insurance Distribution class.

AMI has also strongly supported the inclusion of provider contributions to the intermediary classes, which we believe mistakenly disappeared from the FSCS structure at the time the FSA split in 2013. Its reintroduction will only accurately reflect the existing regulatory landscape and will hopefully focus all minds more clearly on their respective responsibilities and accountability.

AMI will be responding to the consultation before its closes on 30 January.

Robert Sinclair, Chief Executive of AMI said

“We have been tirelessly lobbying several issues with the FSCS structure and we are pleased that the significant work we have carried out with the FCA over the last year is materialising.  To see revised proposals include the removal of protection from the pensions class is positive as this will greatly impact mortgage intermediaries’ bills.  The fact that the FCA has decided to re-consult with industry rather than proceeding with one of the proposals set out in the last paper is encouraging.  They have not only listened to our concerns but are openly engaging with industry to ensure that they implement the fairest solution.

We are pleased that the FCA has recognised that providers are also responsible for the distribution of their products.  Whilst the proposed provider contribution of 25% is not as high as we had hoped for, it’s a step in the right direction.

We are really happy that the work done since the first consultation has paid off with a further consultation which reflects our long-term lobbying position.”

AMI has announced details of its Board elections which will take place in November. As part of being an open and transparent body, which is fully representative of its members and their interests, the period for nominations for certain Board positions has now been opened. These are part of the process where all Board positions are re-elected on at least a three-year rolling cycle, although existing members of the Board may stand for re-election. This year’s Board elections will take place in the Regional and National firm constituencies, the Network constituency and the Club constituency.

Any AMI member firm who falls under one of these constituencies can nominate a member of their senior management team to stand for election. To stand individuals must complete a nomination form and be nominated by an AMI member from within the same constituency. Nomination forms must be returned to AMI by 1 November.

Should more than one AMI member want to stand for the Board, a contested election will take place. Those individuals standing will be required to submit a biography and an election manifesto to those constituents eligible to vote. Ballot papers for a contested election will be sent out by 13 November.

The results will be announced on 30 November.

Robert Sinclair, Chief Executive of AMI, commented:

“The AMI Board plays a vital role for the organisation in providing direction and policy guidance to AMI’s activities. Members wishing to serve as AMI Board members must be committed advocates of the intermediary distribution channel and prepared to represent not just their own constituents but the entire mortgage intermediary profession. We hope AMI members will want to contribute to the trade body’s work and shape our ongoing agenda by standing for election.”

AMI members who wish to stand for election to the Board and are in any of the above constituencies can request a nomination form by e-mailing info@a-m-i.org.uk. Regional firms are classed as having between 6 and 100 advisers; national firms with over 100 advisers.

Recent global attacks, a regulatory focus on cyber risk and General Data Protection Regulation mean now is as important a time as ever for firms to review their cyber security strategy.

AMI has created a factsheet for members which sets out the key areas for firms to consider and potential solutions. We suggest that even firms who have developed solutions in this area check their plans against the sources in our factsheet. Firms should approach cyber risk in a similar way to regulatory risk, in that staff at all levels should have a basic understanding. Cyber risks should also be addressed in firms’ overall disaster recovery plans, which should map the steps that need to be taken in the event of an attack or breach and allocate responsibilities. How a breach is communicated to staff, to the data subjects who might be compromised, and how to deal with regulators and the press should also be covered.

Robert Sinclair, Chief Executive of AMI said:

“The global spread of the WannaCry ransomware should be a wake-up call for businesses to review their cyber security infrastructure, as no sector or type of firm is immune from attacks. This is particularly relevant considering the implementation of the General Data Protection Regulation next May which requires firms to understand how they hold and process their data, with significant fines for any breaches.

Our factsheet should be considered a starting point for members, as the National Cyber Security Centre produces extensive guidance for firms on specific areas. We are including a regular section on cyber security in our monthly member newsletter in which we will feature a different topic and signpost to relevant guidance.”