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FSA wants increased responsibility for lenders

13th January 2005 | back to article listings BACK    print this article PRINT

The Financial Services Authority (FSA) has called for lenders to be given mandatory responsibility for packagers.

Under proposals by the city watchdog, an outsourcing agreement would be drawn up between the lender and the packager, containing an acknowledgement that the lender is "responsible for those regulated activities carried on by the Third Party Processor on its behalf."

The agreement will state: "The main firm (lender) accepts full responsibility for the TPP's acts or omissions when the TPP carries out a regulated activity on the main firm's behalf."

The financial regulator also wants to make permanent the rule that TPPs do not have to disclose their existence where they are acting on behalf of the lender.

FSA spokesman, Robin Gordon-Walker, told the Mortgage Strategy website: "The target of these proposals is TPPs, including authorised packagers, not pure packagers.

"Lenders have always been responsible for TPPs, this is an acknowledgement of this responsibility."

The FSA stated: "A firm cannot contract out its regulatory responsibilities and therefore the main firm is responsible for those regulated activities carried out by the TPP on its behalf."

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