View more on these topics

Dual thinking on wrong lines

The overriding compliance principle provided by the FSA for this year, as you will know, is treating customers fairly. We are all trying to apply the principle across our businesses and working to achieve the six outcomes.

Money makes the world go round and, with the economy slowing, the price of products must be right. We hear that the insurance price comparison websites are to be investigated by the FSA to see if they are misleading. This is reasonable as long as this review includes the FSA’s own product information seen at www.fsa.gov.uk/tables.

The consumer’s preferred route to find information on financial services is through the internet and businesses with considerable influence and financial strength have grown to meet this consumers demand for online information.

The regulator has concerns about clarity, fairness and accuracy of information provided. This will be an ongoing problem to ensure clarity in the now expected post-RDR world as these price comparison sites should be regulated as will non-advising advisers or whatever these virtual/direct operations are called. Or will they be like the Thoresen model and fall outside of regulation?

The problem is that a vast majority of insurance products are not clear”as an additional product feature is added here and there to gain a marketing advantage. It is not easy to provide comparative details on regulated products and it would be a shame if these companies refocused on unregulated products to be outside the remit of the regulator.

On the basis that price comparison sites may not be treating customers fairly, it is beyond my comprehension that the FSA is saying that dual-pricing in the mortgage market is to be allowed and this practice does not fall foul of TCF. According to the FSA: “Lenders are not obliged to deal through intermediaries. Lenders are not in breach of any FSA rules if they go down this route and not every product in the market will be available to any one intermediary. In terms of brokers being unable to access the deals currently offered by many lenders direct to the consumer, there is an option to advise the client to go direct and charge a fee for that advice.”

In the past, I have had clients that have come to me when buying a property who before coming to see me have called into their local bank branch to see if they are eligible for a mortgage, the client believing that this will save any later embarrassment if they are declined. It also serves as a useful comparison purpose that the client can see if the IFA is able to recommend a better product than the bank. If I then told the client that the mortgage deal offered by one of the biggest mortgage lenders in the UK was suitable and I would take over the tracking and chasing of the mortgage, the lender would generally not allow this to happen and would insist the client remained a direct client and would not correspond with me. A tricky situation if, for example, I needed to cash in investments or arrange bridging for the client.

The regulator goes on to say: “The crucial point is ensuring that the customer is clear about what they are being provided with. The intermediary should clarify that there are deals only available direct from certain lenders. We don’t however think the intermediary needs to be specific about those lenders and the deals.”

How on earth is this treating the client fairly and in an impartial whole of market way? This needs a rethink, especially as more and more people are seeking advice on mortgages.

Recommended

Euro directive could hit group pensions

A new European Union directive could significantly reduce the number of people enrolled into group personal pension schemes despite auto-enrolment getting the green light from Brussels last week.

Who cares?

By Tracey Dickson, marketing consultant There are almost 7 million carers in the UK – that’s around 10 per cent of the population who provide unpaid care for a disabled, seriously ill or older loved one.1 But according to a report from the charity Carers UK, 20 per cent of people providing 50 hours or more of care […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment