FSA Compliant??

[johnz]

Hi guys. Sorry if this post is a bit blunt. I have the flu, my head hurts and I think my brain is slowly being chipped away by the billion little men with pick axes that are in there, so tact isn't going to be a strong point of mine right now.[:D]

So now everyone is pre-warned, here's my question.

Are IP's, debt advisors, etc, etc required to be FSA compliant?

If not, why not? They are giving financial advice.

And if they are, why do they not have to send out the usual forest worth of paperwork that IFA's and Brokers have to send out before giving the advice?

Just a question.

Cheers me dears. I'm going to take some flu stuff and crawl back into my pit of bed now. *sniff*[8D]

Johnz

[emma_t]

Hi johnz

I would be no where near qualified to answer your question, so will leave that for someone else!!

Just wanted to say Get Well Soon, have an early night (try night nurse liquid if you can't sleep, it always keeps me asleep!!)
[:)]Emma

[Andrew Graveson]

Hi johnz,

Hope you're on the mend?

IP's are regulated by the professional bodies of which they are members. In my experience (I have been a Director of a national insolvency business previously) this represents a tough regulatory regime. I'm sure the IP's will confirm this.

Debt Advisors have to hold a Consumer Credit Licence which is issued by the Office of Fair Trading. The issue of such a licence will be subject to checks that the person or company issued with the licence is fit to hold it.

Mortgage Brokers, as you have stated, are FSA regulated.

The overall level of regulation is significant. For example our business activities are covered by the FSA (mortgage broking), OFT (various), Ministry of Justice (a limited amount of claims activity we have been involved in), and the Information Commissioner (data protection).

Of all of these the regulation of debt advice and debt management is the least rigorous. Many of those who operate in this sector would welcome further controls to weed out the cowboys.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[mikebdomain]

Hear hear Andrew (on the last paragraph)


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[johnz]

See, I'll be honest here and say that after reading that I'm now considering saying something to my director at work. We provide software solutions to IFA's to be FSA compliant. So it might be an area that may be of interest in future. Especially if the people in the business would want something like that. I dunno. I throw ideas out, most of them go nowhere.

Johnz

[Andrew Graveson]

Keep an eye on the regulation of debt management.

If the OFT were to tighten controls or pass the regulation to the FSA you might be onto a winner with a compliance product.

Which mortgage systems do you provide?

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[johnz]

I can't name companies that use our software, otherwise I might get into trouble, but we use Trigold, MBL, Webline, L&G, The Exchange and a number of other sourcing tools. Only been doing the job 6 months and they confuse the hell out of me [:D]. Before that I tested Personal Lines insurance software. Have spent a shed load of time testing FSA compliancy software, which was why I was so surprised that the several companies I contacted regarding my financial problems didn't send me any. I wasn't aware there were different supervising bodies. You learn something new everyday, eh[:D]

Johnz

[MelanieGiles]

Johnz

I feel that the DMP industry and even our own (we have been also monitored by the FSA since Jan 07) will be required to have added compliance checking, and there definately may be opportunities or ideas for you.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Adam Davies]

Hi
I think,from my perspective of someone from the outside looking in,that the debt management/advice side of the insolvency business is the weakest link.
Obtain a consumer credit license and your off...........advise people on debt,get them to send their payments to you,pocket the first payment and then 15% of any future ones.
I,m sure that it's not a simple as that.
Is it ?

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Andrew Graveson]

As you say the business is not as simple as that Andy.

There is scope for more regulation for the benefit of all involved.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[catullus]

Actually Andy, it really isn't much more complicated than that.

The formalities of obtaining a consumer credit license are routine and the real barrier to entry is buying in the systems or developing them yourself to handle a large volume of tiny transactions, usually on a weekly basis.

This barrier really isn't as formidable as you might imagine because the industry is littered with breakaway startups by the wannabe managers of the bigger players who have never had any formal training and frankly are not qualified to give advice.

The staff are very young, are heavily sales incentivised and many couldn't spell mortgage let alone know what paying one off feels like.

The big pay day for these guys is an IVA and they'll say pretty much anything to persuade a client to consider one. The IP, in this situation has to act as the back stop to prevent inappropriate IVA's being approved.

I'm afraid that's a fairly accurate description of the whole of the DM industry and, whilst I accept that some are better than others, the lack of regulation, as a general rule, results in pressure selling and very poor advice.

Nevertheless there is a place for DM, in the scheme of things, but for the reasons that I have given (and I really do have hands on experience of the industry) I struggle to understand why a clear candidate for an IVA would want to go through a badly trained,poorly regulated middleman.

I think that this board is far better qualified to help potential candidates decide whether an IVA would be right for them and then point them in the right direction to chose an IP,than any DM company.

The DRF was originally intended to deal with many of these issues but it seems to have rather lost its way and for reasons that aren't wholly clear appears to have taken on for itself the role of defender of the IVA when our own regulators should be doing it, but frankly haven't got the guts to take on the banks.

In the meantime, we drift along under the TIX regime, giving them the confidence to believe that our industry considers that it can operate with their cost structure when countless people who should be in IVA's are excluded on cost grounds and our profession is being incentivised to act as glorified debt collectors for the banks.

And the DM companies carry on,unregulated and in many ways encouraged by the banks because there general attitude is that they would rather have a debtor in the hands of a poorly qualified debt manager than in the hands of a competant IP.

[MelanieGiles]

Catallus

I have just spent the evening working on four self-employed proposals where my nominee's fees are no more than £1,400 per case (for joint proposals!) due to the recent fee setting operated by TiX and others.

Our industry cannot continue to function with such low costs - my time costs on each job are nearer £3,000 as we have had to do a lot of accounts preperation and verification, coupled with a detailed face to face meeting with our clients. IPs who say that they can do a cheaper job are simply not doing the job properly.

I sincerely hope that I never have to turn anyone away, as this nation needs to support its small business' survival - wasn't that what the Enterprise Act was all about? - but I am running my own business and we cannot continue to operate under a "one size fits all" policy.

Whatever has happened to the DRF?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Andrew Graveson]

I think that I should have written that the business should not be as simple as that.

Catallus is right to say that the industry is littered with wannabe ex-managers of bigger players setting up for themselves and employing/empowering staff not qualified to give advice.

For many of these companies the big prize certainly is an IVA. In terms of cash-generation they will make a debt advice company tick over and I don't doubt for a second that IP's are on the end of inappropriate cases directed to them as a result of this.

I also agree that a poorly regulated and badly trained middleman is no good for anyone.

The flip-side of this is that the IVA industry is under increasing scrutiny. The Guardian online today included the IVA industry amongst the top ten financial rip-offs to avoid (amongst PPI insurance etc). I don't think that this is a fair picture of IP's or the IVA industry but the public perception of IVA's and IP's seems to be in the balance as a result of the actions of a few.

For every few wannabe middleman with poorly trained staff providing poor debt advice can it honestly be said that there isn't a poor salaried IP endorsing poor advice with poor IVA proposals? Is every IP competent?

Given the evidence of a few pressure-selling IVA/IP companies isn't it a good thing that there are companies that can offer and deliver a variety of solutions?

I think that the IVA is a hugely important solution for very many people. I think that the vast majority of IP's are honest/decent and provide advice in the best interests of their clients. I think that there are a lot of good debt management and debt advice companies out there. We all, debt management and IVA, know that there's some dross amongst us.

The IVA is under threat in many ways. Perhaps we should all be looking to ensure that our own industries are as clean as they possibly could be rather than comparing levels of regulation?

I fully agree that this board is highly qualified to guide people in the right direction. The reality however is that not everyone has internet access and those that do may not necessarily find this site. For all of these people there should be a good regulated industry out there whoever they are dealing with.




Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[mikebdomain]

I woke up in the middle of the night niggled about this thread – at the time only Andrew and myself had posted. I had no idea what was niggling me, as I should have been more concerned with preparing the next day for my staff and my wifes birthday (which is today).

As I said, to start with I was not sure what it was, but after reading cattuluss’s comments this morning it bought it home to me.

FSA regulation is not about the regulation, the other bits of paper required to do business in the industry of basic financial advice do not carry anywhere near the same weight as FSA authorisation. To apply for and obtain a CCL is not difficult, to obtain a DPA certificate again is not difficult. As long as you are not a criminal nor are you money laundering, anyone can get either, there is no further supervision and to be honest, it’s a bit annoying to see FSA regulation in the same paragraph

No, the important aspect of FSA compliance is the authorisation, the constant reporting to the FSA (RMAR reporting), supervision of the FSA of directly authorised firms and Appointed Representatives (ARs), the twice annual financial adequacy checks, the additional monitoring and supervision of the FSA to ensure properly authorised firms and individuals carry the correct required insurances and that authorised firms carry out their business according to the FSA principles. FSA authorised and regulated firms are charged with having proper systems and controls in place and must have Approved Persons (Aps) at the head of the company.

FSA compliance as far as the mortgage advice and the general industry is concerned is starting to work – it’s a bit slow, and there are still a lot of grey areas where people are giving advice without being properly supervised, monitored or even authorised. They are being weeded out.

The FSA handbook has just undergone another major overhaul and at the moment seems to be in constant flux. This causes a massive headache for our compliance department as they struggle to keep ahead of the changes and change our end-to-end processes to ensure the meet the stringent requirements of the handbook.

My personal opinion on bringing dept management and or IPs under the FSA wing is, please, let them finish getting it right with us first.

Once the FSA has finalised the decision whether regulation is going to be fully principled or principled and partially prescriptive and have sorted out the many areas of complication and confusion concerning supervision and reporting requirements of authorised firms, it should then be pretty easy to include the other financial disciplines as good business practice, is good business practice, throughout the industry as a whole.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[johnz]

I'm sooo sorry Mike. I only asked cos I was curious. Didn't mean to keep you awake at night thinking about it. I didn't think it would turn into such a big discussion.

My bad [:I]

Johnz