Forty years ago Ian Broadbent’s father took the decision for his Lincolnshire-based firm, Blue Sky Mortgages, to have a broad lending focus, offering mortgage broking services in addition to secured loans and bridging finance.
The firm has been involved in secured finance since before there was a Consumer Credit Act - and even got “heavily involved... like a lot of people” in the 1990s in sub-prime lending, which Mr Broadbent meiotically describes as having “not had the best rides of late”.
Having been active in the market over such a lengthy period and during times of real distress, it is striking to hear the vitriol he reserves for the current shifts in consumer credit regulation as oversight shifts from the Office of Fair Trading to the Financial Conduct Authority.
He states simply: “It’s an appalling mess.”
Mr Broadbent explains that the issue which has provoked the most anger among financial advisers is the transient treatment of the licence, which initially had a lifespan of 15 years, before being shortened to five years and then eventually made “indefinite” by the OFT.
Now, the FCA is issuing interim licences ahead of applying for longer-term licences from the autumn of next year - though at least it belatedly revealed it will be giving advisers back the money they spent on the previous ‘indefinite’ licence.
He adds that there is added frustration at the lack of understanding among the regulators over how particular areas are going to be regulated, with questions about whether particular areas are covered often being passed between the two bodies and no firm answers offered.
He explains: “They are going through a consultation process at the moment which seems ridiculous... you have to license with the FCA on an interim basis but they don’t know what the rules will be, so actually everybody is pretty much up in the air. The way it is being handled and rushed through is diabolical.
“I actually did refer a question to the FCA consumer credit division about whether I needed a license for a particular activity and they came back and said, ‘we can’t tell you but if you have a look at the OFT site it gives you some ideas’. But the OFT site is that vague that I am not in the least bit surprised that people are confused.”
FTAdviser previously reported that neither the OFT or FCA have offered any clarity over whether financial advisers need a CCL for various post-Retail Distribution Review charging models or ‘debt advice’ and has merely been telling the industry to seek legal advice.
“In my opinion most financial advisers will in some way transgress debt counselling as you can’t really talk to someone about their financial circumstances, investments and various things without touching on what they are paying out for various other things of course.