Mortgage brokers should not be paying for misdemeanours in sectors where they do not advise, argued Robert Sinclair, sounding a rallying call on reform of the Financial Services Compensation Scheme levy.
Speaking at last night’s (16 June) Association of Mortgage Intermediaries annual dinner, its chief executive told guests that brokers paying half the costs for bad pensions advice was simply not right.
“If there was one single pond crossing all sectors that was paid for based on income that might be appropriate. At the other end many small pools appropriate to the advice area could also be correct,” he stated.
“We must set out agreed principles before diving to the costs, as only on this basis will we have a proper debate.”
Mr Sinclair suggested the FSCS funding review should have opened on a product levy, not dismissed it as out of scope because it requires legislative change.
“We need to hope that the lobbying on this in Westminster works before we go too far down another road.
“Risk based levies are not a panacea, but due diligence and proper whistle-blowing to a regulator who acts swiftly is important.”
He pointed to work within the mortgage industry to remove rogue brokers from panels, which Mr Sinclair said backed up his notion that those left should not have to pay “vast fortunes” in FSCS compensation for poor investment and pensions advice.
“It would be good to know how many advisers have lost their certificate of professional practice. I am prepared to bet I will not need to take my socks off or even my gloves to count them up,” Mr Sinclair commented.
Ami’s other big challenge this year was around the Financial Conduct Authority’s competition review, which Mr Sinclair said came as a surprise.
“We do not need a market review, as I do not see issues in this competition paper that my friends in FCA supervision could not have dealt with under their usual work programmes.
“It looks like some people looking for a job to do, rather than a job that needs doing.”
Last month, the regulator responded to a previous call for evidence on responsible lending by announcing plans for a ‘targeted market study’ in the fourth quarter, focused on consumer choice in the mortgage market and the impact of borrowers’ increased use of brokers.
Mr Sinclair suggested the FCA’s focus on panels, fees and technology are just the natural stresses of a dynamic, competitive market where the best create both challenge and opportunity, adding: “Some feel threatened by change and success - but fortune is likely to favour those who make brave decisions.”
“Interfering with things risks adding a barrier to entry rather than lowering one. Firms that struggle to get traction in a market need to try harder, get better and force the issue,” he said.
Mentioning the merger of trade bodies like the Council of Mortgage Lenders and British Bankers Association, he implored fellow associations to work together in improving the wider industry.
He said: “I fear there are some in the regulators who would prefer the trade bodies to be in conflict; divide and rule. I implore my fellow trade bodies and their members not to go for the easy shot with the regulator.
“Take the better route of us working together, to move our industry forward together, taking full account of all interests. Going it alone or at the expense of partners can never be right – it will only allow the bureaucrats to take advantage of us all.”
Alison Beech, managing director of Valunation, commented: “Working together in co-operation has arguably never been more important than it is now and high quality events such the Ami annual dinner play a valuable part in making that happen, leading to the success of the whole industry.”
peter.walker@ft.com
