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Boost for advisers as least worst rule axed

The least worst option has been abolished in final rules for mortgage regulation, meaning that lenders and intermediaries must send potential borrowers to an IFA if a product in their own range does not exactly meet their needs.

Tied brokers or lenders will be prevented from recommending a product unless it is entirely suitable and in the FSA&#39s opinion, the best course of action will be to send borrowers to an IFA.

In the past, if a consumer&#39s needs were not exactly matched by a product, a tied broker or lender could recommend the next best thing or the least worst option.

For example, a firm dealing solely in the sub-prime market will not be able to recommend a sub-prime product if app-roached for advice by a customer with an unblemished credit record.

The FSA says, in its opinion, the most appropriate course in such cases would be for the firm to tell the customer to seek advice.

This move has been welcomed by the Association of Mortgage Intermediaries which says it will present many more options to intermediaries. Director Chris Cummings says the burden of the new rule will be felt by lenders as it is an intermediary&#39s job to help find clients the best mortgage.

He says lenders will have to tell a customer that they cannot meet their needs and they should seek advice if there is not a suitable product in their range, even if the lender is making a non-advised sale.

Cummings says: “This presents many more options to intermediaries as, unless a product meets a consumer&#39s needs exactly, they must be sent to a financial adviser and cannot just be offered the closest match.”


FSA to review projections and key features

The FSA has pledged it will carry out a fundamental review of projections and product disclosure regimes. It plans to consult on new proposals in Q4 2004 with a view to making rules in 2005. The regulator will also revise the current key features regime for product disclosure, presently outlined in CP170: Informing consumers. The […]

Falcon seeks funding to expand

IFA network Falcon Group is seeking capital to expand its IFA offerings and increase its presence in the marketplace and says under the right market conditions, it would seek a stockmarket listing. Chief executive Allan Rosengren says the firm is seeking additional funding to buy equity stakes in IFA firms and to launch an IFA […]

Platform launches new product range

Platform has added more products to its range, which now includes a bonus discount scheme on non conforming loans and widened criteria on remortgages. All non conforming cases received by 1st June 2004 will receive an extra 0.25 per cent for the discount term. Unlimited capital raising is now available for remortgaging for any purpose […]

SFO to look into Penrose report on Equitable

Equitable Life&#39s former management may be the subject of a criminal investigation after it emerged that the Treasury has referred the Penrose report to the Serious Fraud Office. The SFO has confirmed it has received the 800-page report and will be looking to see whether it is appropriate for it to carry out an investigation […]


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