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Inside edge

Perhaps understandably, the Mortgage Code Compliance Board is usually quite guarded and certainly diplomatic when expressing its views in public. Not surprisingly, therefore, there is now much industry talk about the MCCB&#39s robust response to CP146, in particular, its warning that filtering questions, as proposed in CP146, could be the “recipe for total disaster”.

I agree wholly with the MCCB&#39s analysis of the position. The key principle of the proposed filtering questions process is that no recommendation is made by the mortgage consultant (I avoid using the word adviser for obvious reasons).

So, where is the consumer benefit in that, let alone the consumer protection?

What is the purpose of filtering questions in the context of a mortgage intermediary&#39s business? Put yourself in the consumer&#39s shoes and ask why they would be contacting a broker in the first place. More often than not, it i for professional advice.

I can certainly see that a mechanical process (such as those used on typical internet mortgage sites) can use filtering questions to identify a generic type of mortgage which suits the client, such as a fixed rate of five years or less or a cashback mortgage.

But any filtering which moves to identify a particular lender and a particular deal must surely cross the line into advice? It is difficult to believe that using filtering questions which arrive at fewer than four or five product choices is not giving advice.

If you examine the operating style of a typical mortgage call centre, the process might start out as a mechanical, impartial structure but sooner or later the client asks questions which results in the mortgage consultant wandering into advice giving. It is here where the danger lies.

We strongly believe that a consumer fundamentally expects advice and recommendations from a mortgage consultant. Filtering questions could create a hiding place for unqualified and incapable advisers, thereby offering no consumer benefit or protection.

Considering the MCCB&#39s concerns about the proposed removal of hard fee disclosure, I do not share the MCCB&#39s view that this is a major threat. Sure, it is a potential U-turn from the code but the extent of consumer detriment is likely to be minimal.

I support the theory that non-disclosure of fees could encourage an unscrupulous adviser to sell a product which is lucrative for him but useless for the client. But where most lender fees are in the same ballpark, £100 to £250 per case, I just cannot see many advisers deliberately selling a product which is wrong.

Clearly, this risk is greater in the sub-prime arena, where a dishonourable adviser might conceivably earn hundreds of pounds more from one lender than another. On balance, we are relaxed about whether fee disclosure stays or goes.

The MCCB has a view that the qualification deadline poses no major problem, as 50,000 out of 85,000 candidates will have passed. My view is different, in that 35,000 unqualified advisers simply has to mean that we are facing a serious discontinuity in the market. The key point for me is that we, the MCCB and examination bodies do not appear to know whether the 35,000 likely to be banned from advice giving come January are lender or broker advisers. This piece of data is essential if we are to sensibly predict whether or not consumers will face less access to mortgage advice.

I take the point that we could still have 50,000 advisers but, in reality, hundreds of these are lender and broker support staff, who have sat the examination for personal development and not to enable them to provide advice.

My strong suspicion is that the majority of the unqualified advisers will be broker sales staff, on the basis that lenders typically pushed their staff through CeMAP much sooner and on the basis that brokers often leave things to the last minute. This poses a serious threat to availability of advice. Thousands of mortgage brokers will be prevented from giving advice after Christmas and consumers will find it tougher to find independent mortgage advice for sure.

Robert Clifford is managing director at national broker franchise mortgageforce

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