SUPERVISORY PRIORITIES

The Financial Services Authority (FSA) regularly publishes its business plan as a demonstration of its transparency as a regulator. In the 2008/09 plan it has set out its Supervisory Priorities over that period. It is essential for intermediaries to be aware of the issues that he FSA believes are important.

In the past the FSA claim to have found "widespread significant weaknesses in financial advisers and mortgage brokers. This work remains a priority for the year ahead and we will be following up again to ensure firms have acted upon our findings and improved practices to achieve the levels of compliance we need to see as commonplace in the market".

In the spring newsletter the following areas were set out as top priorities for the mortgage sector:

Senior management responsibilities

Management information (MI)
Monitoring

Demonstrating suitability
Affordability
Self-certification
Training and Competence

Recruitment
Supervision

Qualifications and training

Other areas of focus include (although this is not exhaustive):

Payment Protection Insurance

There have been both FSA and Competition Commission reviews conducted into the PPI market with significant improvements required in some sectors. The FSA have given a clear intention to focus their attention on those firms operating in the retail sector.

Controls over Appointed Representatives (ARs)

In 2007 the FSA found that some customers of ARs were at risk of being treated unfairly because their principal firm did not have adequate controls in place. They have asserted that they will continue following up this work.

Right to Buy Mortgages

The FSA has indicated that they will be paying particular attention to the firms who specialise in advising customers exercising their right to buy property.

Protection Insurance

Over the 2008/09 period the FSA will be reviewing the advice and sales of both low and high risk protection products to ensure firms understand their obligations under the new Insurance Conduct of Business (ICOB) requirements.

Mortgage Fraud

There has been increasing evidence of fraud occurring in the mortgage sector. The regulator will be increasing its focus and will be assessing the systems and controls within mortgage firms to ensure that firms are not being used for fraudulent business.

Regulatory Returns

The regulatory information sent to the FSA is key to identifying risks, so it is important that Returns are submitted in a timely and accurate fashion. Several initiatives have been implemented to educate and encourage firms with persistently poor returns to improve the quality of submissions. The FSA has warned firms that continue to submit poor returns will be subject to closer supervision.

The Small Firms Regional Assessments that are being conducted over the next three years, and have been designed to contact every firm with a turnover of less than £3m per annum, will be steered by all of these Supervisory Priorities.