The Financial Services Consumer Panel has called for the FSA to scrap its proposed ban on non-advised mortgage sales.
In its final mortgage market review consultation paper, published in December, the FSA proposed non-advised sales should be banned where there is “spoken or other interactive dialogue” between a customer and a firm.
High-net-worth clients are exempt from the proposal and all customers can proceed on an execution-only basis if they reject the original advice.
At an MMR seminar in London this week, FSCP chairman Adam Phillips said: “This has gone a bit too far. The evidence is that it is a market where quite a lot of people understand what they are doing. They need clarity but if they have already taken a mortgage, they should be able to do this on their own again. It makes shopping around more difficult because you have to get advice.”
Phillips suggested the requirement should only apply to credit-impaired customers, equity release and right-to-buy customers and first-time buyers.
The panel called for the FSA to create a new rule immediately to ensure that lenders protect “mortgage prisoners” who have been hit by recent standard variable rate increases and are unable to get a new mortgage.
It also called for the FSA to delay the introduction of its responsible lending proposals, covering the new affordability requirements and interest-only proposals, until the housing market has recovered.
Lentune Mortgage Consultancy director Stuart Gregory says: “Most borrowers do not follow the mortgage market closely so there is a gaping hole in the argument that people who have gone through the process understand what they are doing. In this market in particular, people should be getting advice.”