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FSA says suitability means affordability

Concerns over the exact nature of the suitable mortgage advice demanded by FSA consultation paper 146 were raised at the BSA conference.

FSA manager of mortgage policy Susan de Mont tried to clarify the situation, saying that for a mortgage to be suitable it must be affordable.

She said the consumer&#39s opinion is all-important as the most suitable mortgage is the one they think has the most important price features.

But MCCB chief executive Luke March is concerned that this could result in lack of clarity and could possibly lead to future problems with the Financial Ombudsman Service.

Britannia Building Society non-executive director Professor Bridget Rosewall also warned that it is difficult to define an appropriate level of borrowing. She said that lenders cannot be held responsible for future changes in circumstances to the borrower that could affect affordability.

De Mont accepted the importance of the consumer taking responsibility for their own financial decisions but she pointed out that the FSA is limited in its options to control the ombudsman as it is a separate body not under FSA jurisdiction.

Rosewall said: “How far can future events be insured against? And how far is this the responsibility of the lender? In my opinion, the lender is more of an endangered species than the borrower.”

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