Red tape for advisers post-Mortgage Market Review

Existing people not at QCF level three will have until 26 October 2016 (30 months after the reforms come into force) to reach the minimum qualification threshold. New entrants to the mortgage adviser market, joining the industry at any time after the rules come into force, will also have until that date.

The mortgage QCF level three syllabus is being reviewed every three years - and the regulator has not ruled out that it may eventually seek to increase the qualification requirement to level four in line with that for retail investment advisers under the Retail Distribution Review.

While courses vary, Robert Sinclair, chief executive of the Association of Mortgage Intermediaries and Association of Finance Brokers, warns it will generally be more than one exam that must be passed to complete the qualification.

Mr Sinclair points out the IFS School of Finance recommends that 200 learning hours of study time are spent on CeMap, but it will depend on the individual’s experience and knowledge.

Laurence Baxter, head of policy and research at the Chartered Insurance Institute, says sales staff and advisers wishing to attain the QCF level three certificate through his organisation would need to hold the Certificate of Mortgage Advice.

This requires the following two exam passes:

• CF1/R01 Financial Services Regulation and Ethics: this requires an estimated 60 hours of study time culminating in a two-hour exam made up of 100 multiple-choice questions; and

• CF6 Mortgage Advice: an estimated 70 hours of study time culminating in a three-hour exam of 100 multiple-choice questions and five case studies comprising five multiple-choice questions.

Having passed these exams, the practitioner would receive the Certificate of Mortgage Advice and the Cert CII (MP) designation.

To maintain this designation, Mr Baxter says the practitioner would need to be a member of the CII, which would require:

1) complying with the CII’s code of ethics; and

2) complying with the CII Continuing Professional Development scheme: the practitioner would need to undertake a minimum of 35 hours of activities per year that meet the practitioner’s own development needs. At least 21 of hours of the total must be structured, in that it must comprise of formal learning activities designed to meet a specific learning outcome.

In terms of meeting the exam requirement, Mr Baxter says this varies heavily depending on the practitioner workload, whether they are doing this on a part-time or full-time basis, and whether they need the total 130 recommended study hours.

For anyone requiring a mortgage qualification confirmation, Richard Nuttall, head of policy of SimplyBiz Group, says the FCA’s Handbook TC Rules provides the qualification body and exam title that meets this requirement.

How long it takes to obtain the professional qualifications required to offer mortgage advice post-Mortgage Market Review is dependent upon the qualification body and the individual concerned, Mr Nuttall adds.

“In most instances, where someone has been working within the industry, this can be completed in a relatively short space of time.”

If you have not already done so, you should apply for the FCA authorisation to carry out a regulated activity, according to the CII’s Mr Baxter.

This involves obtaining a part 4A permission from the FCA on advising on “regulated mortgage contracts”, “home reversion plans”, “home purchase plans”, or “sale and rent-back agreements”.

If you are authorised to conduct some other regulated activity, and you wish to extend your permission to conduct these mortgage activities, Mr Baxter says you can apply for a variation of permission from the FCA, and your policies, procedures, systems and controls would be assessed.

For more information on this, refer to the FCA’s Factsheet number 5: Mortgage intermediaries, lenders and administrators (published June 2013).