The new Mortgage Market Review rules, which will be implemented on 26 April 2014, will introduce sweeping changes to the mortgage market.

Chief among them is that lenders - not intermediaries - will be responsible for affordability checks and verifying borrowers' income "in all cases". Additionally, the regulations officially remove the non-advised sales process, specifically all 'interactive' sales such as those done face-to-face or over-the-phone, which must be 'advised' sales from April 2014.

In the current consultation, the FCA proposed changes to two existing regulatory reporting forms:

-    Product sales data –firms would report enhanced affordability data and collect data on the performance of all existing regulated mortgage contracts;
-    The Mortgage Lending and Administration Return – the FCA proposed to collect additional data from non-deposit taking mortgage lenders, most of which are prudentially regulated by the FCA.

The consultation runs for another three weeks exactly, until 15 August 2013, so voice your opinion if you haven’t already. The FCA expects to issue final rules in Q4 2013, which will come into effect 12 months later.

Crackdown
It's now been one year since the launch of the FLS and there is some serious regulation or crackdown which needs to occur as many banks, like RBS, are retracting net lending but at the same time seemingly using the money to balance the books.

Even when the FSA was creating the MMR consultation paper, I had been informed that the then regulator had hired one ‘researcher’ to be in charge of each respective chapter despite not having the knowledge or experience.

The FSA finished its tenure before the distribution and separation of powers by fining people left right and centre. But by fining people does that regulate the industry and bad firms? Of course not…

Fines
The FSA issued a total of £311.6 million in fines against over 50 firms over last year, a massive 371 per cent increase on the £66.1 million in fines issued in 2011. £189.7 million came from a combined UBS fine, and Barclays was fined £59.5 million, both for manipulating Libor. Therefore, 80 per cent of FSA fines that year (£249.2 million) were just on those two firms.

The FSA was not effective and its last minute attempt to fine firms and disqualify advisers did not go unnoticed, it was clear that it tried to make as much noise as possible in the last few months of its tenure. Looking at the FCA this year, the outfit looks more organised and seemingly monitoring and cracking down on the industry. But how many of the fines, disqualifications and warnings made this year do you think has come from a backlog of errors over the years… most of them if not all I would say.

Further
On the second charge front, we’re eight months away from being regulated by the FCA. From the 1st April 2014, regulation of consumer credit will transfer to the FCA.

Letters have been sent this week by the FCA and the OFT to advise what the next steps are, but how many advisers are currently applying for FCA regulation? But more importantly, how is the FCA going to cope with the heavy flow of applications?

It’ll be interesting to see what the results will be over the next year with financial professionals watching the FCA's every move, monitoring regulation from the MMR consultation in Q4, and to prepare for, using the opening sentence of 1984, "a bright cold day in April".

Regulators… we’re watching you.