The Financial Conduct Authority has hinted at a potential revamp of qualifications requirements for intermediaries as part of its reform of the mortgage advice market, which could see advisers and brokers forced to meet QCF level four in the same way as pensions and investment advisers.
Under the final Mortgage Market Review rules, which were published in October 2012 and come into force in 2014, there has been no change to the qualifications requirements for mortgage advisers, meaning they must hold a QCF level three qualification at a minimum.
This was the level of qualification required in the newly-defined retail investment advice market prior to January 2013. Under the Retail Distribution Review this was controversially increased to a minimum of QCF level four, with even long-standing advisers not being excused.
In a document published yesterday (11 April) responding to questions raised during a series of ‘roadshows’ on the new rules, the FCA hints that while the mortgage advice qualification requirement has not been lifted in the final rules, it may seek to do so in future.
Responding specifically to the question of whether it would be lifting the threshold, the FCA refuses to rule this out and states that it will be undertaking a full review of the exam syllabus after the MMR is implemented.
It said: “We are planning to review the mortgage exam syllabus, which has not been reviewed since 2004. However, this review will not take place before implementation. In future we plan to review the syllabus on a more regular basis.”
The document also reveals concerns at the regulator over lenders shifting to execution-only sales, which will continue to be allowed under the changes.
Responding to a question on whether there will be a prescribed limit on such business post-MMR, the FCA says there will not be any set limit, adding it will expect lenders to “take a risk-based approach” and “have a policy... setting out the steps they will take if they exceed their expected levels of execution-only business”.
It added: “We intend to closely monitor and supervise the levels of execution-only business undertaken by firms and any unexpected spikes will be investigated further.”
The document also covers issues in relation to revised affordability criteria, interest-only mortgage sales and general queries on when a sale falls under the definition of regulated advice.
In particular on advice the FCA says even lenders with only a single product will have to conform with the requirements for full advice, adding simply that “in the majority of sales, advice will be required.”
