Blemain & Cheshire Regulations

[welshperson]

Re: Blemain & Cheshire Regulations

I don't think it is legal to have 2 insurances's running on the same property? it is certainly illegal to claim on them,in fact it is a criminal offense
Mind you do Blemain do anything legal? we will have to wait and see for this answer
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Thanks Andrew1, different companies (i agree) different regulators (i agree) BUT fined for similar things if not EXACTLY the same things (do you agree?)

hi you up late jumper

wp

[jumper999]

Re: Blemain & Cheshire Regulations

LOL yes WP......been sleeping during the day plus been eating too many oranges and my vitamin c levels are still buzzing LOL...hope your well

[jumper999]

Re: Blemain & Cheshire Regulations

LOL yes WP......been sleeping during the day plus been eating too many oranges and my vitamin c levels are still buzzing LOL...hope your well

some reading for all....

[andrew1]

Re: Blemain & Cheshire Regulations

Thanks Andrew1, different companies (i agree) different regulators (i agree) BUT fined for similar things if not EXACTLY the same things (do you agree?)

No, I don't agree.

Swift Advances plc has not been fined for their charging practices or activities on second charge loans by the OFT - YET!

only Swift 1st Limited have by the FSA for their mortgage indiscretions.

The charging regimes within both Swift companies are similar and should , in the eye's of the public and the account holders, be treated similarly as far as fines and refunds are concerned, BUT no determination has been made on Swift Advances plc for their second charge loans by the OFT so your comment is incorrect. Sorry, but splitting hairs is what I do.

[jumper999]

Re: Blemain & Cheshire Regulations

Thanks Andrew1 but are Swift not a sub prime lender?

[jumper999]

Re: Blemain & Cheshire Regulations

Found it LOL!!!

OFT censures sub-prime lender Swift

Mortgage Solutions | 24 Jun 2011 | 10:43
Mortgage Solutions
The Office of Fair Trading (OFT) has warned sub-prime secured lender Swift to improve its lending and collection practices or risk losing its credit licences.
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FSA: Mortgage lenders failing on TCF

Mortgage Solutions | 28 Feb 2011 | 15:31
Vicky Hartley
Some UK mortgage lenders continue to punish mortgage borrowers unfairly by pushing them on to higher Standard Variable Rates or making borrowers repay mortgages in-full for minor breaches, said the FSA.


The Financial Services Authority (FSA) has highlighted a raft of lender tactics, which it said is detrimental to consumers, including poor treatment of borrowers in arrears.
Problems highlighted include lenders moving consumers from their discounted initial rate deal to the firms' Standard Variable Rate (SVR), for minor breaches, possibly leading to payment shock.
Some lenders have also demanded immediate full repayment of mortgage loans after a minor change in consumer circumstances, said the FSA.
Several lenders including Chesham Building Society and Blemain Finance in 2010, National Australia Bank, In Retirement Services and Barclays stretching back to 2007, have already been forced to change unfair terms in consumer contracts.
In its first Retail Conduct Risk Outlook (RCRO) the report outlined how an economic downturn can impacts firm's treatment of its customers and offers the FSA insight to feed into its work and all regulatory changes.
Meanwhile, despite lower than expected arrears levels, the FSA said a number of problems remain in this area, primarily from specialist lenders.
The regulator said issues include unclear customer information, charging structures incompatible with treating customers fairly and fees which don't reflect administration costs.
The FSA said impaired credit lenders are much more inclined than mainstream lenders to impose a ‘one size fits all' policy and move swiftly to take possession, without establishing borrowers' individual circumstances.
It added these lenders' internal controls and training and competence arrangements were also "noticeably less developed" than those belonging to mainstream lenders.
It said there is anecdotal evidence that the terms of securitisation covenants are restricting their ability to treat customers in arrears fairly, said the FSA.
"We have taken enforcement action against mortgage firms where we identified breaches in our rules or principles," said the regulator.
It said this area needs increased vigilance, particularly if interest rates start to rise and or the economy deteriorates further.
Adair Turner, FSA chairman said: "The Retail Conduct Risk Outlook is a timely reminder of the consumer protection challenges facing the FSA, its successor bodies and financial firms over the coming years."

[jumper999]

Re: Blemain & Cheshire Regulations

What Is An Introducer Of Mortgage Business

Firstrung introduce potential clients to Pink Home Loans. Pink are part of the Skipton group of companies. Skipton has a wide portfolio of interests, its mortgage packaging and distribution arm is, in the opinion of Firstrung, the market leader.
1 INTRODUCTIONS
1.1 Introducers
An Introducer is any individual or firm that introduces clients to either an authorised firm or an Appointed Representative, or distributes non real-time financial promotions on their behalf, for the purpose of arranging a Regulated Mortgage Contract.The Introducer is not an authorised person and cannot undertake any regulated activities.

1.1.1 Introducer Appointed Representative.
An Introducer Appointed Representative (IAR) is an Appointed Representative whose permitted activities are limited to effecting introductions to an authorised Principal firm or distributing non real-time financial promotions on their behalf, for the purpose of arranging an Insurance Contract.

1.1.2 How do the two types differ?
- The IAR must be approved by the Principal firm in line with the same procedures for the approval of an Appointed Representative, there are no such requirements for an Introducer.
- The IAR must be set up by way of a contract; only an agreement needs to be completed in respect of an Introducer.
- The IAR will generally already be working in a regulatory environment.
- It is possible for an IAR to carry out non-advised sales on behalf of the Principal firm.
- Due to the exemptions set out in the Financial Services and Markets Act 2000, Regulated Activities Order Articles 25(A) and 33(A), the concept of the Introducer Appointed Representative does not relate to the mortgage regime.
Therefore within the mortgage regime only the Introducer concept is relevant.
1.2 The role of the Introducer.
The Financial Services and Markets Act 2000, Regulated Activities Order Articles 25(A) provides two definitions for arranging 'Regulated Mortgage Contracts'. These are:
1. 'Making arrangements for another person to enter into a Regulated Mortgage Contract as borrower' and, 'making arrangements for a borrower to vary the terms of a Regulated Mortgage Contract'.
2. Making arrangements with a view to another person who takes part in those arrangements entering into a Regulated Mortgage Contract as a borrower.
Definition 1 covers the normal activities of a mortgage broker such as completing the application forms. As such this would involve them in arranging and therefore would need to be either authorised or exempt.
Definition 2 only covers assisting the borrower to make the arrangements, i.e. introducing the client to an authorised or exempt firm. This would prohibit the completion of any application forms and therefore would not be regarded as a regulated activity. However the definition only covers the arranging of new mortgage loans and excludes variations to an existing Regulated Mortgage Contract.
The Financial Services and Markets Act 2000, Regulated Activities Order Article 33(A) provides Introducers with exclusions from regulation in respect of introductions for new mortgage loans to the following:
- An authorised firm.
- An exempt firm (i.e. an Appointed Representative).
- An overseas firm.
There is no requirement that the introduction has to be made to a firm that offers independent advice.
The effect of these exemptions is that Introducers are permitted to refer clients to authorised firms or Appointed Representatives. However there are a number of conditions applied to the exclusion, which are detailed below.
1.2.1 What rules apply to Introducers?
What Introducers must not do:
- They must not do anything more than is necessary to effect the introduction.
- They must not complete a customer fact find form or any documentation other than a basic referral form.
- They must not ask the client any questions regarding their mortgage needs.
- They must not handle any client money (this would include valuation fees administration fees etc.)
What Introducers can or must do:
- They can receive a fee from the authorised/Appointed Representative firm for the introduction.
- They can receive money from the client on his or her own account. (e.g. a builder can receive the money relating to the purchase price of a new property).
- They can pass on the name, address and contact details of the client to the authorised firm.
- They must obtain the client's express permission in writing for the authorised/Appointed Representative firm to contact them.
- They must advise the customer if the authorised/Appointed representative firm that they are being referred to is part of the same business group.
- They must advise the client of any fee that is to be received, by the introducer, for making the introduction. If it not possible to confirm the exact amount of the fee, it is sufficient to state the method of calculation e.g. 'a % of the loan agreed'.
- They must advise the client of any other reward or advantage they will receive for making the introduction. This could be training, office space etc.
- They must make and retain a written record of the disclosures made to the client (even those made orally).
1.2.2 Can the Introducer advertise?
Introducers can communicate non-real time financial promotions concerning secured lending. However, all promotional material must fully comply with the requirements set out in MCOB 3 of the FSA handbook.
For Introducers to Pink Home Loans all non-real time financial promotions must be approved in line with the procedures set out in section of this manual Approval of Financial Promotions 1.2.3
Who can be an Introducer?
Under the FSA rules there are no minimum benchmark qualifications or formal approval process in respect of being an Introducer.
However, firms must make sure that where they appoint and accept business from Introducers, they are confident that such Introducers are fully able to comply with the requirements of the exclusions set out in RAO sections 25(A) and 33(A).
Should an Introducer not comply with the requirements, the introduction would fall outside of the authorisation and the Regulated Mortgage Contract could be unenforceable.

[jumper999]

Re: Blemain & Cheshire Regulations

Blemain Finance are an introducer appointed representative of Cheshire Mortgage Company.....for Insurance purposes...I know sparkie ahs thrashed this argument out a lot....so if they are IAR of CMC then shouldn't CMC's name be on the agreements instead of Blemain Finance.

I have tried to type in google can a IAR loan money? and so much is coming up all over the place...and would like to really get to know what activities a IAR can carry out and can they be a lender as well as an IAR at the same time?

any input in to this will be great.......

[jumper999]

Re: Blemain & Cheshire Regulations

Blemain Finance are an introducer appointed representative of Cheshire Mortgage Company.....for Insurance purposes...I know sparkie ahs thrashed this argument out a lot....so if they are IAR of CMC then shouldn't CMC's name be on the agreements instead of Blemain Finance.

I have tried to type in google can a IAR loan money? and so much is coming up all over the place...and would like to really get to know what activities a IAR can carry out and can they be a lender as well as an IAR at the same time?

any input in to this will be great.......

If you read step two on the sheet below....it says if you introduce mortgages (which Blemain do) you will not need to become an IAR (Introducer Appointed Representative)

It is like Blemain are having it both ways....

[jumper999]

Re: Blemain & Cheshire Regulations

a little more confusing stuff..

[jumper999]

Re: Blemain & Cheshire Regulations

...........

33. What is an Introducer Appointed Representative (IAR)?

The Insurance Mediation Directive defines introducing insurance business as a regulated activity and requires introducers to be registered with the FSA, which is a straight forward process as they will not be giving any advice and therefore not subject to the full FSA regime that applies to AR’s.

IAR’s are permitted to introduce clients but cannot undertake any other regulated activity (e.g. fact-finding, issuing illustrations or advising clients).


OK, Blemain cannot undertake any regulated activity as they are an 1AR but then CMC should be named on the agreements and not Blemain? unless I am not making sense?


5. What is the difference between an AR and an IAR?

AR’s are authorised to provide advice on and arrange regulated products, whereasIAR’s can only introduce clients to an AR and distribute basic financial promotions on behalf of the AR.


so the ultimate lender would/should be Cheshire Mortgage Company?



I bet Blemain get extra commission from CMC

[jumper999]

Re: Blemain & Cheshire Regulations


However, as much as we are happy to receive professional introductions, there are many FSA rules and regulations, as well as best practice guidelines to follow first.

Please read our FAQ's below, and if you would like to progress a discussion with H D Consultants, please contact us here.

Frequently Asked Questions

1. What is an Introducer?

An Introducer is an individual or firm who has a commercial interest in passing client details to H D Consultants, with a view to any type of regulated business being conducted. Introducers range from estate agents to firms of Solicitors.

2. Are there different types of Introducer?

Introductions are split into the following two categories in accordance with FSA requirements.

Mortgage, equity release, investment and pension introductions

Any individual or firm who introduces any of the above categories of leads must be appointed by H D Consultants as an Introducer.

Any Introducer receiving a reward or advantage relating the sale of an insurance contract will need to become an Introducer Appointed Representative (IAR) of H D Consultants (see ‘Insurance introductions’ below).

Insurance introductions

Where an introducer passes on client details to H D Consultants with a view to effecting an insurance contract, (e.g. term assurance, critical illness plans, PHI, ASU, PMI and B&C) or receives any reward in connection with the sale of an insurance contract, then the introducer must become an Introducer Appointed Representative (IAR) and be registered with H D Consultants, our Principal 'Personal Touch Financial Services Ltd' and the FSA, unless an exemption applies (see question 4 below).

3. What is an Introducer Appointed Representative (IAR)?

The Insurance Mediation Directive defines introducing insurance business as a regulated activity and requires introducers to be registered with the FSA, which is a straight forward process as they will not be giving any advice and therefore not subject to the full FSA regime that applies to AR’s.

IAR’s are permitted to introduce clients but cannot undertake any other regulated activity (e.g. fact-finding, issuing illustrations or advising clients).

4. Are there any exemptions so introducers do not need to become an IAR?

Yes. There are two exemptions available.

Professional firms - the FSA permits Solicitors, Surveyors, Accountants and Actuaries to carry on insurance mediation activities in the course of their professional activities. Such professional firms need to be authorised by the FSA as exempt professional firms (EPF) to carry on insurance mediation activities.

A professional firm’s status can be checked online via the FSA’s EPF firms register to ensure they are entitled to use this exemption.

There is no requirement to register an EPF as an IAR where insurance leads are provided, however the EPF must be approved by our Principal 'Personal Touch Financial Services Ltd.'.

Other FSA authorised firms - where the regulated firm/individual does not have relevant permission in relation to insurance, or approval from their principal to effect insurance business, they will need to vary their permission accordingly. The individual/firm also must be approved by our Principal 'Personal Touch Financial Services Ltd.'.

5. What is the difference between an AR and an IAR?

AR’s are authorised to provide advice on and arrange regulated products, whereas IAR’s can only introduce clients to an AR and distribute basic financial promotions on behalf of the AR.

6. What client information can an Introducer provide?

The FSA have stated that Introducers can only provide the following client details:

Name;
Address;
Contact details;
When best to contact;

Under FSA rules the introduction type can be stated (e.g. mortgage or insurance), however, gathering information about clients’ requirements in connection with regulated activities is not permitted (e.g. their income details).

7. What must Introducers disclose to clients?

Before making the introduction, the Introducer must inform the client:

If the Introducer is a member of the same group of companies as the AR;
Details of any payment the Introducer will receive by way of a share of the commission;
An indication of any other advantage arising out of the introduction such as office space, travel expenses, subscription fees etc.

8. Can the introducer handle any client money (e.g. valuation fees)?

The Introducer must not receive any money in connection with the transaction the client will enter into with the lender/provider as a result of the introduction. In other words, the Introducer cannot accept payment due to the lender/provider, e.g. valuation fees or arrangement fees.

The only money the Introducer may receive is money rightfully owing to them on their own account. So, an estate agent, for example, would be able to receive money due to him for the sale of the house but not in relation to valuation fees.

9. Can Introducer’s advertise the services of H D Consultants AR’s?

Where Introducers wish to make a financial promotion by advertising H D Consultants' services in their marketing material (e.g. within their Shop Fronts or Websites), H D Consultants have a duty of care to ensure that the promotion complies with FSA requirements. There is a responsibility to ensuring that all Introducer literature that refers to H D Consultants' services is submitted to the Compliance and Financial Promotions team at our Principal 'Personal Touch Financial Services Ltd.'. for approval before use.

If an Introducer wishes to purely confirm that they act as Introducers, this would not be classed as a Financial Promotion providing certain wording is used.
If you would like to progress a discussion with H D Consultants, please contact us here.


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Step away from that regulated activity The FSA's definition of an IAR

23 February 2004

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RICHARD GRIFFITHS Managing director, Network Data
What's the difference between a boat and a ship? You can put a boat on a ship, but you can't put a ship on a boat.

What's the difference between an introducer and an introducer appointed representative? An introducer can introduce mortgage business to an IAR, but an IAR cannot introduce mortgage business to an introducer.

An introducer, by definition, lies completely outside the FSA's rules. This means the FSA has no powers to censure, fine or de-authorise an introducer in the same way as it has no jurisdiction over the mortgage sourcing systems and cannot hold them directly accountable for inaccuracies in mortgage criteria or KFIs. Mortgage introductions can be made to directly regulated firms, to ARs or to IARs, with a view to arranging, advising or lending.

However, the FSA lays down a number of rules which apply to introducers and which they must observe otherwise they run the risk to stepping over the invisible line and carrying out a regulated activity, which would technically be a criminal act. Introducers must disclose their status, they must not handle client money and they must disclose their fees/payments and who they are acting for.

For insurance sales, the EU Insurance Mediation Directive says that to qualify as an introducer, a firm must actively introduce the client to a third party. The display of brochures does not amount to introducing.

For the background to introducer appointed representative, we go back to CP159 Appointed Representatives which was published in December 2002. See the box on this page for the up-to-date definition of an IAR in the FSA's glossary.

In CP159, paragraph 3.63 says that where introducers are not excluded from regulation and therefore require authorisation, they may become IARs. Paragraph 3.69 makes it clear that you can be an IAR for some product categories and a full AR for other lines. I assume from this that a firm cannot be directly regulated and an IAR in the same way that it cannot be directly regulated and an AR.

Paragraph 4.13 says that an IAR may have more than one principal, removing the previous rule that an IAR (for investment business) could only have one principal, and that IARs can be appointed by either a product provider or an authorised intermediary.

A point to note for those IARs who have multiple principals is that, unlike the rules for ARs, there is no need for inter-principal agreements.

As for introducers, IARs are required to inform customers of their status as introducers.

The Policy Statement, Prudential and other requirements for mortgage firms and insurance intermediaries, makes it clear in paragraph 4.18 that IARs do not come under the approved persons regime. The final rules for an IAR (as well as full ARs) are shown in the supervision handbook (SUP).

Life company appointed representatives
A few life companies still maintain tied agency networks, the origins of which date back to the golden era of endowment sales in the late 1980s when the main focus was to sell an endowment policy alongside the interest-only mortgage.

At that time, an endowment contract fell firmly into the realm of a regulated activity under the Financial Services Act 1986. The rules governing the sales of such investments meant that an adviser could tie to one life company only and that rule still applies.

But at that time it didn't really matter if your clients were restricted to the endowment product of just one provider. They all sounded the same anyway e.g. Scottish Life, Scottish Widows, Scottish Amicable, Scottish Mutual, Scottish Equitable, and they all used the same projection rates for the expected growth of the endowment fund. The projected value of the fund to pay off the original mortgage and hopefully leave a surplus would have been exactly the same regardless of the provider.

But we are now in an era where consumers are financially more literate, expect choice and know where to find choice if their adviser does not provide it.

We are also into an era where investment policies, whether endowments, ISAs or pensions have a reputation for poor returns and mortgages are generally sold with protection only products.

So does it make sense to tie to a principal firm such as a life company that can only provide their own products? We are mainly talking about term assurance but with composite insurers such as Legal & General you may also be restricted for general insurance products. The answer is probably not. Whilst life companies are likely to retain the majority of their tied agents under regulation, it is questionable whether they will recruit non-regulated agents as tied agents.

The latter are likely to be attracted by the flexibility and choice they will have with the networks.

Life company tied agents are a remnant of a bygone age.

The FSA's definition of an IAR
What is an introducer appointed representative?

SUP 12.2.8G
1: An introducer appointed representative is an appointed representative appointed by a firm whose scope of appointment must, under SUP 12.5.7R, be limited to:

• Effecting introductions to the firm or other members of the firm's group; and •Distributing non-real time financial promotions which relate to products or services available from or through the firm or other members of the firm's group.

2: The permitted scope of appointment of an introducer appointed representative does not include in particular:

• [details about not arranging or advising on mortgages & insurance] 3: An introducer appointed representative may have more than one principal but will need a contract with each principal.

4: The approved persons regime does not apply to an introducer appointed representative (see SUP 10.1.16R) SUP 12.2.9G
To become an introducer appointed representative, a person must meet the conditions in the Act to become an appointed representative (see SUP 12.2.2G)

Notes:
• SUP 12.5.7R refers to the need for a written contract with the principal firm.

• SUP 10.1.16R refers to Prudential requirements; the approved persons regime.

• SUP 12.2.2G refers to the general rules defining an AR and the responsibilities of the principal firm(s).

[jumper999]

Re: Blemain & Cheshire Regulations

2007 The Year that Reckless Bank Lending Made History

2007 - This was the year that reckless bank lending made history and it is now almost certain that 2007 will be seen as the start of a financial down turn throughout the world. The blame for that is banker's greed and the use of invented reckless banking instruments to fuel that greed. Those reckless banking instruments were created without thought of their soundness or security value. It is possible that legal actions will follow later as the full impact and recklessness of these bundled instruments becomes clear. IBAS has witnessed nothing in the last 15 years which comes close to the scale or magnitude of what is now happening.
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Subprime lenders slammed by FSA - Telegraph

[jumper999]

Re: Blemain & Cheshire Regulations

Negligence claims could drop after GMAC-RFC vs Countrywide verdict | News | Mortgage Strategy

But he added that if it had been found liable, the judge would also have found that GMAC-RFC was contributory negligent for not verifying the borrower’s income and other information on the mortgage application.
He claimed that if the lender had carried out the proper checks on the applicant it would probably not have advanced the loan.

[jumper999]

Re: Blemain & Cheshire Regulations

http://www.bailii.org/ew/cases/EWHC/Ch/2011/3307.html

here is the judgment.....good timing

This case raises three key points.

First, it is difficult to establish negligence by a valuer, bearing in mind the ‘bracket’. The impugned valuation was £185,000. C’s expert valued the property at £154,000 with a bracket of 4% which would have comfortably placed the impuged valuation well outside the bracket. D’s expert valued the property at £175,000 with a bracket of 12.5% which would have placed the impugned valuation well within the bracket. The judge accepted D’s valuation of £175,000 but opted to fix the bracket at 8% which just brought the impugned valuation within the bracket. Claimants need to bear in mind a degree of tolerance in valuing their claims. The bracket is not necessarily 10%

Second, it helpfully explains the court’s approach to contributory negligence by a mortgage lender and in particular (a) the way in which the court will review a lender’s underwriting process both in principle, bearing in mind the relatively high loan to value ratio, and specifically having regard to failures to follow up obvious lines of enquiry on the mortgage application form, and (b) the correct approach to quantum - requiring the court to identify first the amount of recoverable loss, secondly making a discount for contributory negligence against both the recoverable and irrecoverable loss, but allowing the claim up to the limit of the recoverable loss. Note the significant deduction of 60% for lender negligence.

Third, it confirms that a cause of action in a lender can on the particular facts survive the sale of the mortgage debt to a special purpose vehicle.