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FSA Competence and ethics consultation paper – comments invited by September 2010
The FSA is inviting comments on its ‘Competence and ethics’ consultation paper (June 2010) which outlines proposals to increase scrutiny of competence and ethics within the financial services industry. This builds on the work of earlier initiatives to protect consumer interests, such as TCF, ongoing thematic work, qualifications reform, and the proposed widening of the Approved Persons Regime (APER) to include mortgages advisers and arrangers.
The proposals affect both individuals who perform specific roles within firms and the firms themselves. Those most relevant for mortgage intermediares include:
- a new 30-month time limit within which individuals subject to a qualification requirement under the FSA Training and Competence rules must successfully pass all modules
- clarification of the FSA’s expectations about the responsibility for competence within the Approved Persons Regime
- additional wording regarding the ethical behaviours expected from individuals operating as Approved Persons (more below)
Approved Persons Regime and ethical behaviour
The Approved Persons Regime sets out seven statements of principle that apply to all Approved Persons. Each statement is underpinned by a code of practice setting out descriptions of behaviour which, in the FSA’s opinion, do not comply with the principle.
The proposed additional statements on which consultation is sought relate to Principle 1 (Act with integrity) and 2 (Act with due skill, care and diligence) and are:
- ‘not paying due regard to the interests of a customer’
- ‘deliberate acts, omissions or business practices that could be reasonably expected to cause consumer detriment’
Related links
Follow the links below to find out more, including how to respond online.
FSA to extend Approved Persons Regime to mortgage advisers
Following its regulatory review of the mortgage market in 2009 the FSA is proposing to extend its ‘approved persons’ regime to those arranging advised and non-advised sales of mortgages, sale and rent back agreements, home purchase plans and home reversion plans - whether on behalf of a lender or an intermediary firm. The proposals don’t extend to administrative, underwriting or processing staff unless they are involved in the sales process.
An ‘approved person’ must be assessed by us the FSA to be ‘fit and proper’ for their role. This includes assessing an individual’s honesty, integrity and competence.
The FSA is also proposing that all firms (lenders and intermediaries) should have in place a named individual, likely to be a director or a senior manager, who is responsible for overseeing compliance of the firm’s regulated mortgage activities. This individual would also come under the ‘approved persons’ regime.
By making all mortgage advisers directly accountable to the FSA and requiring them to prove they are fit and proper to carry out their job the FSA aims to reduce mortgage fraud and unsuitable advice - and thereby reduce unfair treatment of customers.
The consultation – which also invites feedback on changes to arrears handling by lenders - ends on 30 April. To find out more including how to provide your feedback, follow the links below. The FSA plans to issue a Policy Statement setting out its rule changes in June 2010.
Firms required to publish complaints data to help with TCF
From January 2010, new FSA rules designed to encourage firms to deal with complaints more effectively - and so improve TCF - require firms with 500 or more reportable complaints in a six-month period to publish their data twice a year. The FSA will in turn use the information to publish a consolidated list of complaints data covering all affected firms twice a year.
Data, which must be broken down by key product area including mortgages, should show:
- how many complaints the firm has opened and closed
- percentage closed within eight weeks
- percentage of complaints upheld
Firms with 500 or more complaints on a complaints return covering a period ending on or after January 2010 must have published their summary data and notified the FSA by 31 August 2010.
You can read more about TCF and effective complaints handling in our section Complaints and TCF.
To find out more about the new FSA rules follow the link below.
New complaint reporting rules – information from the FSA
