Ami: FSA should up visits to improve cost efficiency
Businesses will save money in the long-run under a regulator that takes a preventative rather than reactive approach.
The Financial Services Authority’s lack of visits to broker firms is a symptom of a reactive rather than proactive regulator, the head of the Association for Mortgage Intermediaries has argued.
In an interview with FTAdviser, Robert Sinclair, director of the Ami, said the FSA would be more effective if it took a more preventative rather than responsive approach to regulation.
Mr Sinclair said that just before the FSA took over from the self-regulating Mortgage Code Compliance Board, the MCCB visited 300 lenders and 30,000 brokers over the course of two years. “In two years they visited the whole industry,” he said.
In contrast, Mr Sinclair said, the FSA will visit 100 lenders and 10,000 brokers over the course of a four-year cycle.
He said: “The industry paid £4m for the MCCB and it pays £18m for the FSA. They’re less proactive, less effective [and] they’re less efficient. They’re not out there walking the patch.
“The good thing about the MCCB was it walked the patch. It turned up in somebody’s office or front room and said ‘show me how you do business’. That tends to work.”
Mr Sinclair believes an FSA that is more present in the businesses it oversees will give it a more “symbiotic” relationship with the industry.
He said: “If a regulator comes along to a firm and says “you’ve done this wrong, put it right”, that costs a lot of money.
“If they told the firm up front “do you think that’s a good idea?”, which is where they are trying to get to but I don’t think they have quite got the language right, you get into a better place. It’s a bit more preemptive so you stop the bad things happening.
“But that takes a very different style and ability of a regulator.”