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Mortgage Compliance - FSA Mortgage Market Review

The FSA have proposed

new reforms in the discussion paper are suggesting that a smaller role for the specialist lender that rely on intermediaries for mortgage distribution, the IDD to be scrapped and a mandatory suitability letter be issued.

They are also recommending individual FSA authorisation of mortgage advisers, and mortgage compliance oversight function, Self-certification and fast track mortgages be banned, verification of income in all mortgage cases, with no mortgages for borrowers who fall into more than one 'high risk' category.

The review also goes on to say

that mortgage lenders and mortgage intermediaries should carry out detailed affordability assessments on all mortgage cases including calculating 'free disposable income' after outgoings. (this should be old news by now)

Mortgage Intermediaries will still have to carry out their own affordability assessments, including non-advised sales and interest-only mortgages which will be assessed for affordability at repayment level.

The discussion paper also suggests

limits on withdrawing equity from borrowers' homes, Buy to let mortgages and 2nd charge mortgages to be regulated by the FSA.

Ed notes

most of the above is part of Mortgage Compliance procedures (MCOB) anyway, and all mortgage advisers should have been conducting the sales process well before October 2004, or at least after regulation to MCOB and FSA Principles, do we not remember something called know your customer KNY and TCF (Principle 6).

If anybody needs help on their record keeping systems, compliancetraining.uk.com is the right place to be, why not start by reading the mortgage review!

Submitted by {Compliancetraining.uk.com} on Tuesday 27th October 2009