Mortgage intermediaries are split as to whether the Financial Services Authority's move towards principles-based regulation will benefit firms.
The latest intermediary census from the Association of Mortgage Intermediaries’ (Ami) has revealed 39% of members who were asked for their opinion on principles-based regulation believe it will improve the regulatory regime for firms while 41% say they think it will make no difference at all.
A further 6% believe small firms are set to benefit from the move to principles-based regulation while 14% believe only larger firms are set to benefit.
At the same time, 22% of Ami members believe the shift to principles-based regulation will give them more flexibility to decide how to meet the FSA’s standards but 57% believe it will bring greater uncertainty over what is and what is not considered 'compliant'.
And 28% of respondents are concerned it will also be harder to defend complaints while 19% believe the move will mean a greater need for the FSA to police the market.
The FSA’s handbook currently runs to almost 9,000 pages and the regulator has indicated its wish to move away from the prescribed rules the industry currently uses to a more principles-based, regime.
The FSA says firms will still have to reach the same standards of regulatory compliance but believes a more principles-based approach will provide firms with an increased number of options on how to reach those outcomes.
But Rob Griffiths, associate director at Ami, says the full impact of change has yet to be determined and it is clear there is a level of uncertainty from mortgage intermediaries around principles-based regulation and the challenges and benefits it may bring.
“It has already been suggested that a move to more principles-based regulation could leave a gap between the FSA’s high-level principles and any detailed rules required, for instance, by European Directives," says Griffiths.
"We must be clear on what fills such a gap – be that industry codes of practice or trade body guidance. It would not be helpful for firms to see one set of FSA prescribed rules replaced with numerous, perhaps conflicting, industry codes,” he warns.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
Less environment, more governance threatens to undermine firms' green credentials
Evidence your compliance
Would create €1.4bn giant