The Association of Mortgage Intermediaries has spoken out in support of the FSA’s plans to ban non-advised mortgage sales after trade bodies representing lenders rallied against the proposal.
Last week saw the deadline for responses to the FSA’s final mortgage market review consultation paper, which was published in December.
In the paper, the FSA proposed non-advised sales should be banned where there is a “spoken or other interactive dialogue” between a customer and a firm, although a customer could reject the advice after receiving it and proceed on an execution-only basis.
The Council of Mortgage Lenders has called for lenders’ call-centre staff to be exempt from offering advice and warned the proposal would reduce lending volumes because of increased cost and time requirements and make it harder for new lenders to enter the market.
Sinclair says he would be willing to support a relaxation of the rules for call-centre staff if they are working in a purely transactional capacity. But says lenders have not offered a definition for these roles. He says: “There is a gap between call-centre staff who are doing genuine processing and where they are doing something which would change aspects of the loan, like reducing payments or increasing the term of the loan, which we believe would have to be advised. I am struggling to work out where the dividing line is.”
The Building Societies Association also criticised the proposal, arguing that making advice mandatory is “inappropriate and impractical” and removes customer choice.
Ami director Robert Sinclair says: “We fully support the proposals to make advice the default position for all mortgage transactions, with an opt-out for those confident they can execute it themselves. A mortgage is one of the biggest transactions people will complete, so we think they should benefit from advice at the start and throughout the life of the loan.”
Lentune Mortgage Consultancy director Stuart Gregory says: “I agree with the Ami. Banning non-advised sales will get rid of a common scenario where customers go into a bank and come away thinking they have had advice when they have not.”