'Interest-only rules give IFAs advantage'
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The FSA’s proposals to ensure interest-only borrowers have an appropriate investment vehicle in place would put IFAs at an advantage over mortgage brokers when advising clients, experts have claimed.
In its latest mortgage market review consultation paper earlier this month, the FSA prop-osed stricter criteria for interest-only mortgages, suggesting they should only be offered where a suitable repayment vehicle is in place. This means the borrower will have to have a realistic plan to pay back the capital at the end of the mortgage term that does not rely on house price inflation or the intention to downsize.
Personal Touch Financial Services sales and marketing director Dev Malle (pictured) says: “Organisations that have IFA status will see a big opportunity as those that do not cannot advise on repayment vehicles.”
The Mortgage Alliance head Phil Whitehouse says the proposals suit the IFA approach.
He says: “Your average mortgage broker has not got the permissions to advise on investment vehicles, whereas an IFA who can offer an holistic view has a fantastic opportunity to talk about a wide range of products.
“It could push brokers to up-skill so that they can start to give customers holistic advice. If they cannot do that, they have to align themselves with other businesses that they can refer to. It is all about increased professionalism and increased opportunities for good firms.”
Churchill Investments director Chris Gilchrist says: “Anything the FSA does to make it more difficult to borrow without having a savings plan in place is undoubtedly going to play to IFAs strengths and enable them to do more business.”
An FSA spokeswoman says: “We want to discuss how best to tighten up regulation of interest-only mortgages. We will consult on rules if changes are required after considering feedback to the mortgage market review consultation paper.”
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Readers' comments (1)
Evan Owen | 30 Jul 2010 1:48 pm
Bring back the mortgage endowment?
er.. "after considering feedback".... that's a novel idea.
Dear FSA
IFAs are the ONLY route to comprehensive advice on all aspects of a client's affairs.
Unfortunately the FOS will always focus on one aspect of advice rather than the whole picture. I think it has a form of myopia.
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