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What is the role of a trade body?

AMI Senior Policy Adviser Stacy Penn discusses the role of a trade body in this article, originally published in the TMA Club magazine

When asked to describe the role of a trade body, many people will cite activities that typically fall under the remit of a trade union. What is the difference? A trade union is an organisation that represents its members, typically workers or employees, as individuals. A trade body, such as the Association of Mortgage Intermediaries (AMI), is an organisation funded by businesses that operate in a specific industry and its purpose is to represent the interests of firms.

Over 80% of UK mortgage broker firms belong to AMI, with membership spanning all types of firms from the largest networks through to sole practitioners. We exist to represent these firms’ interests and to deliver a better business environment for them.

Over the years we have developed strong relationships with key stakeholders such as the FCA, Financial Services Compensation Scheme, Financial Ombudsman Service, HM Treasury, Department of Levelling Up, Housing and Communities and Department for Energy Security and Net Zero; other trade bodies such as UK Finance, Building Societies Association, Intermediary Mortgage Lenders Association and the Association of British Insurers; and industry groups such as the Green Finance Institute, the Protection Distributors Group and the Income Protection Task Force.

With a mortgage market that is over 80% intermediated, AMI’s relationships play a key part in ensuring that the provision of good advice is seen as an essential component of a healthy market for mortgages and associated products.

Our influence

Much of our work takes place behind closed doors, yet our efforts often benefit not only member firms but the wider sector.  Recent success stories from the last 24 months include:

  • Consumer Duty – When it comes to regulation, words matter. The omission of a crucial word in a Consumer Duty cross-cutting rule could have had significant implications for mortgage intermediary firms had it not been for AMI’s intervention. At Consumer Duty consultation stage, we highlighted to the FCA the word ‘causing’ was absent from the, at the time, draft rule ‘avoid foreseeable harm’. With the word ‘causing’ omitted, the rule did not clearly articulate to firms and consumers that a firm does not have a responsibility to prevent all harms and risked creating unreasonable expectations. If left unchecked it could have created ambiguity over whether accountability rests with the firm creating the harm, or those involved in manufacture or distribution could have been linked vicariously. This may have resulted in misrepresentation by FOS and prohibitively more expensive Professional Indemnity Insurance (PII) premiums.
  • Merging of fees – AMI consistently lobbied over a number of years for mortgage intermediary firms to be exempt from paying FCA fees under both the ‘A’ and ‘consumer credit’ blocks, where they derive no income from consumer credit activities. Last year the FCA confirmed it will phase the merging of CC2 (consumer credit) minimum fees into fee-block A.0 so that firms in the A and CC fee-blocks all pay a single minimum fee in A.0, protecting the majority of mortgage intermediary firms from paying duplicate fees.
  • Recovery of project costs – we strongly opposed the FCA’s proposal to require all FCA fee payer firms to contribute to the FCA’s costs of bringing funeral plan providers into regulation. The FCA agreed with our argument and only funeral plan providers contributed to these costs. This has created, in our view, an important precedent for when the likes of sectors such as Buy Now Pay Later are brought under regulation.
  • REP-CRIM and FIN074 FCA regulatory returns – many mortgage intermediary firms discovered the regulatory return ‘REP-CRIM’ in their regulatory schedule for the first time. Linked to this, some firms also received a new regulatory return called ‘FIN074’ which asked for turnover information to calculate if an Economic Crime Levy was payable. We worked closely with member firms and the FCA to unpick what was triggering these returns, as we believed most mortgage intermediary firms to be outside of scope. As a result of our work, a significant number of mortgage intermediary firms were identified as incorrectly receiving the returns and subsequently had them removed from their RegData schedule. If AMI had not intervened, some firms would have been required to pay an Economic Crime Levy of between £10,000-£36,000.

Our remit

AMI operates as an independent, non-commercial and not-for-profit regulatory and lobbying trade body. As a result, there are certain activities that we cannot get involved in. One topical example is negotiating with lenders on procuration fees, which many of our members have called on us to act upon. Our work in this area focuses on raising concerns across the market that procuration fees paid by some lenders may not reflect the amount of work required, or the value this gives to the lender but this is as far as we can go – we would be breaching competition law if we tried to negotiate on members’ behalf or encouraged member firms to collaborate.

Our plans

Our policy priorities continue to evolve, as we adapt and respond to an ever-changing advice landscape. We will continue to challenge the FCA on the volume and nature of regulatory returns – and regulatory initiatives in general – as we recognise the increasing compliance burden on smaller firms in particular.

We will develop our work on the green and Diversity and Inclusivity agenda by working with key stakeholders and our industry working groups.

This year also sees the launch of our fourth Protection Viewpoint – comprehensive consumer and adviser research into the UK protection market.

Expanding on the success of previous thought leadership projects, we also have plans to develop a Viewpoint on the ‘value of advice’. We view this as an important tool to help demonstrate to both consumers and providers the role of intermediaries and the benefits they bring.   

This is in addition to our continued work to monitor, analyse and interpret regulatory changes to help firms understand what is coming down the tracks and what they need to do to prepare.

We are grateful for the continued support of our existing members and welcome new members, as the more support we receive, the stronger and louder our voice.

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