30 March 2012
Ms Lynda Blackwell
Conduct Policy Division
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Dear Ms Blackwell
Mortgage Market Review: Proposed package of reforms CP11/31
The Association of Accounting Technicians (AAT) is pleased to respond to question 2 in the Financial Services Authority consultation on “Mortgage Market Review: Proposed package of reforms CP11/31”
The AAT is a professional accountancy body with over 49,500 members and 68,500 students worldwide.
Our licensed members in practice[1] provide accountancy and taxation services to over 300,000 predominantly small business clients (sole traders, partnerships, LLPs, limited company, charities etc).
Continuing Professional Development (CPD) and Professional Indemnity Insurance have been mandatory requirements for our licensed member for many years.
HM Treasury has appointed the AAT as an Anti-Money Laundering Supervisory Authority.
For mortgage purposes AAT members are recognised by 106 Banks and Building Societies in the UK.
The AAT is a registered charity whose objects are to advance public education and promote the study of the practice, theory and techniques of accountancy and the prevention of crime and promotion of the sound administration of the law.
In pursuance of those objects the AAT provides a membership body. We are participating in this consultation as part of our contribution towards the public benefit of achieving sound and effective administration of the law. We also feel that the issues raised in this consultation paper may affect our members in practice.
Vested Interest
The AAT has a vested interest in the outcome of this consultation as our licensed members provide accountancy and taxation services to over 300,000 predominantly small businesses.
Licensed members are regularly asked by their clients to verify the income of their clients for mortgage or loan purposes to the 106 banks and building societies that recognise our members.
Q2: Do you have any comments on our income proposals?
The AAT supports the comments and proposals in paragraphs 3.126 - 3.136 in particular the proposal “to continue to allow lenders flexibility in how they verify income.” This proposal strikes the right balance between regulating the market to promote best practice and allowing the market the freedom to operate cost effectively.
The AAT supports the proposal in paragraph 3.135 to allow lenders to seek verification of income from intermediaries, by which we presume it is meant Independent Financial Advisors.
However, the AAT would recommend that the intermediaries should also include suitably qualified and regulated members of a professional accountancy or taxation body, such as members of the AAT.
It would be helpful to borrowers, intermediaries (IFAs) and lenders, if reliance (but not the ultimate responsibility which rests with the lender as stated in paragraph 3.127) could be placed on AAT members, and other suitably regulated accountants and tax advisors, verifying the income on behalf of their clients, as is currently the case. To facilitate this it would be helpful to allconcerned to issuea list of recognised qualifications which lenders would accept for the purposes of income verification.
The list should include the AAT as our members are suitably regulated and currently assist their clients and lenders in matters of income verification.
Conclusion
The AAT would recommend that one of the outcomes of the Mortgage Market Review consultation is that a list of approved professional bodies, which includes the AAT, is prepared for use by lenders.
Association of Accounting Technicians
30 March 2012
If you have any questions in relations to the AAT’s response to this consultation then please contact:
Aleem Islan
Technical Manager (Accounting)
t:020 7397 3088
e:
Association of Accounting Technicians
140 Aldersgate Street
London
EC1A 4HY
[1] In UK, Channel Islands and Isle of Man