FSA plans to ban client-specific personal referrals under mortgage regulation have been criticised by the mortgage industry amid fears it will increase costs and consumer inertia.
Intermediaries often currently receive possible business referrals to friends from clients after interviews.
However, once mortgages become regulated next October, intermediaries will no longer be able to contact these referrals directly but will have to write to the referral, asking permission to call.
The move has been attacked by Association of Mortgage Intermediaries director Chris Cummings who believes it will add delays and cost. The FSA estimates the cost to the industry will be £2.2m.
Intermediaries say the move will be detrimental as many people are better off after switching products. They say it will only benefit the big banks which rely on inertia to stop consumers moving to more competitive products.
Cummings says: “There are ways around this as the intermediary could write to the client asking if he could call. However, the danger is that both cost and delay will be added to the process. I am concerned this will restrict consumer choice.”
Moneysupermarket.com marketing director Stuart Glendinning says: “I cannot see where the FSA is coming from on this issue. Howard Davies himself said the average consumer could save £1,000 by rearranging finances. Banning cold calling is just encouraging consumer inertia. It is patently absurd.”