Mortgage and general insurance newsletter
The newsletter for small mortgage and general insurance intermediaries
Welcome to the first edition of our newsletter for small retail firms involved in mortgage and general
insurance business, which we will publish periodically from now on. We thought a newsletter would work
well alongside our other initiatives to keep you up to date with key developments in mortgage and general
In these early days of regulation, we felt it would be helpful to set out in our first newsletter our priorities
and the early issues we have seen and also let you know how we will communicate with you.
What does FSA regulation mean for you?
Statutory regulation means us working with you to improve standards across the industry. We will give you
regular feedback on our supervisory work so you can see how your standards of compliance compare with
others. We will also provide practical material to help you and be here to answer questions and listen to
concerns. We plan to give you the tools to equip you for the new regulatory regime – but the responsibility
for your business and compliance will lie with you.
What is the FSA focusing on?
We need to continue processing late applications from insurance intermediaries and to take action where firms
are either unauthorised or acting outside their permissions.
The table below shows our current priorities for mortgage and general insurance intermediaries. These are the
main things we are looking into and will concentrate on during the year:
Systems and controls issues in firms that have Financial promotions.
Disclosure documentation – the standard and length, and points at which they are given to the customer
during the sales process.
Payment protection insurance – in particular, sales High-risk products such as lifetime mortgages,
practices, poor value or unsuitable products, small including sales process, product suitability, and
print and complex terms. documentation for customers.
Regulatory returns – making sure these are accurate and following up late and non-submissions.
Claim and complaint handling in general insurance
These fall under the more general FSA priority of ‘treating customers fairly’. This broadly means firms keeping their
customers at the heart of their business – which we know well-run businesses do anyway.
The priorities above will be tackled as part of our thematic work. This is where we take a look at a particular
area – either to investigate and increase our knowledge, or address concerns. This is the type of work that will
take up much of our time.
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How will the FSA decide what to address?
In deciding which issues to tackle, we will analyse the information we collect – things such as the regulatory
returns you send us; data we receive from product providers; common issues from visits to firms, or
questionnaires received; and information from consumers and the ombudsman service. We cannot take on every
single thing we see, but we aim to make the best use of our resources and concentrate on tackling the most
In addition to this work, we will follow up issues in individual firms if there are significant problems.
What has the FSA found so far?
We have been encouraged by the way firms have prepared for mortgage and general insurance regulation. We
have seen lots of good practice and interest in regulatory matters, as the bookings for roadshows illustrate.
As mentioned above, one of our priorities is improving mortgage financial promotions. The most common theme
in mortgage promotions is that the risk warning is either missing or not prominent. Our recently launched
financial promotions website pages (www.fsa.gov.uk/Pages/Doing/Regulated/Promo/index.shtml) give more
information about the common themes we are finding.
We have also been following up issues with individual firms arising from the authorisation process and doing
some thematic work on lifetime mortgages. We will publish further information about the findings from this
work on our website.
One thing to remember
We will use our disciplinary powers where necessary, for example with firms and individuals that are wilfully
uncooperative, persistently and knowingly non-compliant and who flout the regulations to their own ends. But
we hope that this will be in isolated instances, and that by working with firms we can continue the good
progress that has been made and have the vast majority of small intermediaries running successful, profitable
businesses that provide a good service to their customers, while complying with FSA requirements.
Just the facts – mortgage disclosure documents
We have been undertaking some work on mortgage disclosure documentation, in particular the Initial Disclosure
Document (IDD) and the Key Facts Illustration (KFI).
We have conducted a review of a sample of lenders’ and intermediaries’ IDDs and KFIs. This has indicated that
most firms in the sample are providing consumers with these documents, but we have identified a number of
common areas where they depart from the format and content laid down in our Mortgages: Conduct of Business
Our main findings for intermediaries can be summarised under three main headings:
● failure to use the prescribed text and format;
● inclusion of information the rules do not allow; and
● lack of clarity around fees, commission and charges.
Firms will need to address these issues to ensure that they provide consumers with clear, straightforward and
comparable information to help them understand the services and products offered, and so make informed
decisions. We will be carrying out further work later in the year to monitor the position and will take
appropriate action where firms’ documentation and processes are non-compliant.
For further details of our findings see the Disclosure Documentation Factsheet for Intermediaries on the
FSA website (www.fsa.gov.uk/pages/doing/info/mgi/pdf/disclosure_factsheet.pdf).
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What is the FSA doing about unauthorised firms?
We have a team dedicated to tracking down firms which may be breaking the law by conducting mortgage
and/or general insurance business illegally. This is a major priority for us and vital to protecting consumers –
because if they deal with unauthorised firms they do not have access to the complaints or compensation
schemes. It also helps genuine authorised firms by giving them a level playing field.
But we will not put firms out of business unnecessarily. Where we find that rule breaches are inadvertent or
result from genuine misunderstanding, the firm will have options like getting proper authorisation. However,
to protect consumers, we can choose not to authorise firms that have wilfully breached the rules and can take
criminal proceedings if necessary.
You should check that the firms that you deal with are authorised. You can do this through the FSA register on our
website: www.fsa.gov.uk/register/. If you come across a firm that is not authorised it would help if you could call
us on 020 7066 0082.
We have published on our website (at www.fsa.gov.uk/pages/Library/Communication/PR/2005/046.shtml) the
findings of our recent nationwide investigation into the level of unauthorised mortgage business being conducted.
When will firms hear from the FSA?
Our interaction with small firms is different to, say, a large retail bank. Small firms don’t have a day-to-day
relationship with FSA and will not receive visits on a regular basis. We will contact you only when we need to
follow up information we have received about you or to ask you to participate in our thematic work. This is
how the vast majority of the 26,000 firms that the FSA regulates are supervised.
So how will the FSA communicate with small intermediaries?
We will get in touch with you when we have a specific message for your type of firm, using targeted
communications like this newsletter. We will also publish information on our website, where we have dedicated
pages for mortgage and general insurance businesses (www.fsa.gov.uk/mgi) and a tailored handbook. You will
have probably seen the email we sent telling you about the improvements we plan making to the site in the next
few months and bringing together the information that is relevant for small firms.
How can the FSA website be improved for small intermediaries?
We appreciate that many small firms would benefit from an easy-to-use online guide which uses plain language
to bring attention to relevant regulatory issues. We aim to provide this service through the section of the FSA
website dedicated to small firms.
Please give us your comments on the current small firms web pages (www.fsa.gov.uk/smallfirms). A link to a
feedback form can be found on our website. Your feedback is appreciated and will help us improve our small
firms web pages from August.
What is Firms Online and how can it help your firm?
Firms Online is an important step forward in our aim to make it easier to do business with us. It is a new web-
based system which lets firms submit various applications or notifications to us online over a secure website
and it is essential for electronic reporting. We hope that Firms Online will prove to be a time-saving and
efficient way for firms to communicate with us.
Firms can use it to:
● apply for waivers, variations of permission, cancellation of permission, approved persons and appointed
● notify us of proposed changes in control and other events as required by the FSA Handbook (for example,
rule breaches); and
● inform us of changes to ‘standing’ data, such as a change of address or change of contact details.
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You are able to register for Firms Online now and we encourage you to join the 11,000 firms that have registered
already. Please refer to: www.fsa.gov.uk/pages/Doing/Info/MGI/PDF/online_registering_factsheet.pdf for details
on how to register. Please get in touch with the Firm Contact Centre if you are having technical difficulties
with registration or with the system in general.
How can firms learn more about regulation and meet the FSA face to
We have a series of roadshows around the country that we have designed to help small firms get to grips with
FSA regulation. We use roadshows to help firms understand the new regulatory regime and raise important issues.
They highlight key areas of good and bad practice and planned changes to regulation that may affect firms.
Anyone who works in the retail mortgage or general insurance sector is welcome to come along, but be
sure to book in advance as they get filled up quite quickly. You can get a booking form from our website
at: www.fsa.gov.uk/pages/Doing/Events/pdf/mgi_roadshow.pdf. There is currently no charge for the
roadshows (but this could change if people that have booked don’t turn up on the day).
The dates of our forthcoming roadshows are:
Reading – morning of 27 July
Chester – afternoon of 5 September
We also run industry training events designed to help firms improve their ability to comply with the
requirements set out in our Handbook. More information is available on our website at
How can you get additional help from the FSA?
You should be able to find answers to most queries using the extensive help and guidance available on our
website at: www.fsa.gov.uk/mgi. We aim to provide the tools so firms can help themselves without relying on
us or on professional help.
If you need more then the Firm Contact Centre will be your main point of contact. You can email them at
email@example.com or call 0845 606 9966.
Feedback on our communications with you
If you have any comments about this newsletter or suggestions for future editions, please email:
We would especially like to hear the method you would like to hear from us by – is it through newsletters like
this; emails; factsheets; the website; FAQs on the website; or do you like to meet us face to face at roadshows
and other events?
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