Press
FT Adviser 17th May 2007
FSA painting 'too bleak' TCF picture
Brokers rally over study that criticises TCF implementation
Regulation
Mortgage brokers have hit back at FSA research which found they were the worst at implementing the TCF principle.
The regulator said that only 22 per cent of small mortgage advisers met the March deadline to demonstrate that they were treating customers fairly compared with 52 per cent of small directly-authorised financial advisers.
Chris Cummings, director general of the Association of Mortgage Intermediaries, said looking at the FSA report there was good evidence of TCF in mortgage firms of all sizes and he took "great heart from the solid record of mortgage brokers demonstrating TCF".
He said: "About 22 per cent of small firms have not been able to demonstrate a clear plan for TCF, but that does not necessarily mean that are not doing it, just that they did not meet the FSA's deadline in time."
Mr Cummings pointed out that the FSA research was done in December and January ahead of the March deadline, so it could be that some mortgage brokers did not have a robust TCF plan in place then but were actually ready by the end of March.
He added: "From our own research, 70 per cent of our members said they could demonstrate TCF and 30 per cent said they were in striking distance.
"Clearly, a vast majority of small mortgage brokers receive most of their business through personal recommendations and have been in business for years, which indicates they are already treating customers fairly."
James Carter, principal of Independent James, an independent mortgage broker, said that while he approves of the FSA's commitment to such high values it requires a lot of extra work for small firms.
Mr James said: "Mortgages are a reactionary business and we have often have to organise mortgages quickly for people wanting to buy in such a buoyant housing market so meeting the treating customers fairly deadline does get put on the back burner.
"With small firms it is difficult to do everything, and I think the FSA recognises this, which is why it has extended the deadline.
"The difference between financial advisers and mortgage brokers is that advisers have been under a stricter FSA regime for a longer time, whereas mortgage brokers have only been required to sit exams within the last four years."
The FSA has now set a deadline of December 2008 for firms to be able to demonstrate they are treating their customers fairly, and is developing a frame work to help firms.