The Financial Services Authority has admitted that it has no idea how many new firms it is regulating, after mortgage lending came under its wing from yesterday.
The Financial Services Authority has admitted that it has no idea how many new firms it is regulating, after mortgage lending came under its wing from yesterday. The admission makes it likely that some members of the public will unwittingly break the law by dealing with an unregistered adviser. In that case they would be denied compensation in the event of a complaint.
John Tiner, the chief executive, said: "An early priority for us will be to crack down on any firms that may consider continuing with unauthorised and illegal mortgage business."
The uncertainty surrounding the new regime comes as mortgage applications are beginning to fall, opening the prospect that house lending may slow to a trickle. Abbey National and other lenders have withdrawn some of their mortgages because of compliance concerns. Some brokers are likely to pass on the estimated £100-per-mortgage costs of regulation to their customers.
The FSA is taking over responsibility for regulating mortgage lending, administration, advice and arranging. A spokeswoman for the regulator said: "This is a major extension of the FSA's role, involving direct supervision of thousands of firms and benefiting some 2.75 million UK consumers who take out a mortgage each year.
"We have not got a definitive figure for the number of mortgage brokers, we just know how many have applied to us. The job is to find those who have not come forward."
She later added that 11,000 intermediaries had registered with the Mortgage Code Compliance Board (MCCB), the voluntary body which policed the industry until last Friday.
But in his final report, the chief executive of the MCCB, Luke March, said: "The number of intermediary firms registered with MCCB has fallen. This is reflective of the ever-changing entrepreneurial culture in the mortgage industry."
Estimates within the trade range up to 20,000 mortgage brokers, many of them one-person high street businesses. Some may have not bothered to register, or may have failed to complete the registration process.
The FSA is hoping that Britain's 115 mortgage lenders, including the country's biggest banks, will be the regulator's policemen, as it will be in their interests to ensure that any intermediary sending in a mortgage application is registered. It has been working on the new regulation for four years.
The FSA claims that consumers will now be able to compare mortgages more easily and have access to the Financial Ombudsman. The new rules cover mortgages that are entered into after 31 October.Reuse content