Although it was only last month we commented on the Mortgage Market Review (MMR) implementation, it is important to remember that 2014 will see more FCA policy initiatives involving retail banking, consumer credit and financial incentives.
If we reflect on 2013, there were a number of high profile enforcement cases including, amongst others, JP Morgan, Clydesdale Bank and Lloyds. It is important to note that in speeches by the FCA they have reaffirmed their commitment to achieving creditable deterrence. With the FCA committed to review the effectiveness of MMR as early as six months after implementation it won’t be surprising if large enforcement fines are handed out to companies who have failed to embrace the new regulations.
There is a view that lenders have already brought in new responsible lending policies, but they also need to consider their own risk policies, file checking and quality control issues to meet the revised best practise environment. As a simple example, affordability checks need to have been done thoroughly and transparently. We would interpret that as what does the evidence look like, is it retained on file and is there reasonable justification for the decision, based on it?
Separately, on the advice issue, are advised sales being documented correctly and do they justify the advice and recommendations that lenders are giving to their customers?
With Rockstead’s independent status and a wealth of experience in auditing processes and procedures, we have already helped companies specifically on MMR implementation. Without doubt, now is the time to build controls and policies to ensure not only compliance with MMR, but also that a cultural shift within businesses is taking place to reflect the new regime.