The FSA have started to come down heavily on firms that fail to meet their compliance obligations.
We have seen several firms closed down or fined over recent weeks so clearly there is no room for complacency.
No business wants extra work that doesn’t generate business revenue especially in the current slow market. It is fair to say that most firms are running compliant and efficient businesses and have nothing to fear from the FSA.
However one area that always seems to come up for criticism when the FSA carries out a review is record keeping.
It is up to the broker to be able to prove they are doing things by the book. If they do not have the appropriate records, documentation and client notes to be able to do this, they are not acting compliantly.
Now that client management systems are better equipped to automatically add notes and information to files and can be updated on screen after a phone call or typed up remotely, there is little excuse for failure in this area.
In the past, some firms may have considered it sufficient to merely ask a client what they could afford to pay on a monthly basis. In today’s world that is not good enough.
Instead clients need to be led through a more detailed account of their finances, reviewing the existing borrowing and credit arrangements they have in place along with their regular outgoings.
Clients may overstate their ability to pay simply because they want to buy a property or are unaware of the true extent of their monthly bills. It is up to brokers to make sure they get an accurate picture of each client’s true financial position and that they do not simply rely on what they are told.
Equally there is a duty on the broker to get the best deal possible for the client and make their financial situation work as effectively as possible for them, especially in the current market.
At the moment when products are being pulled so quickly this means it is imperative for brokers not only to be on top of what is available, but also to be processing the work they have quickly enough to be able to secure the best deal for clients.
To do this brokers need to be submitting applications online as and when they have agreed them with the client, or they need to make arrangements for the paperwork to be completed quickly so that the application can be sent before a deal is withdrawn. If a client misses out because a broker has not acted promptly, then they will certainly face complaints.
Brokers in any market always want to provide for their clients, its human nature to a certain extent, but this is not always possible so they must be careful not to offer what they can’t deliver.
Sally Laker is managing director at Mortgage Intelligence
The views expressed in this article are those of its author and do not necessarily represent those of the company he represents, IFAonline or any other Incisive Media affiliated organisation.IFAonline
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