Since the 31 December 2002 anyone advising on mortgages must have gained one of two qualifications. This gives protection to consumers whilst we all wait for mortgages to become regulated activities, like investments and pensions, in 2004.
The Mortgage Code Compliance Board is currently a voluntary body that sets the basic standards for the mortgage industry. However, people offering and advising on mortgages almost have to subscribe to their Code as they would find it hard to do business without it.
There has been much news coverage regarding the availability of Professional Indemnity Insurance for all types of adviser because of the limited number of companies that offer it and the prices are rocketing.
The MCCB is proposing two lots of changes to its rules which will take effect from 1 May 2003. This is the date when all firms must re-register. The first change regards naming and shaming firms they have taken action against. This could be beneficial to consumers thinking of using a mortgage broker.
The second change relates to Professional Indemnity insurance and the fact that the MCCB are not normally notified when cover lapses. This new rule would ensure the MCCB were notified if a company did not have Professional Indemnity insurance and this could then be passed on to consumers if necessary.
Our View:
Any tightening up in the mortgage market is welcomed. You, the consumer, should be protected on whatever you buy or advice that you receive from financial advisers.
Regulation in 2004 cannot come too soon.