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Lenders lobby FSA to get round MMR advice plan

Lenders are believed to be lobbying the FSA to exempt hundreds of their call centre staff from having to be CeMAP qualified to offer advice.

The FSA’s final Mortgage Market Review consultation paper specifies that brokers and lenders will no longer be able to offer customers mortgage products on a non-advised basis.

Under the proposals mortgages must be offered on either an advised basis or execution-only.

Consumers can request an execution-only sale if they know precisely what they want to buy or if they are a mortgage professional or high net-worth client.

However, lenders are believed to be trying to introduce a new tier into the advice process known as transacting, which they argue is not offering advice.

Transacting occurs when a customer who has already taken out a mortgage wishes to make amendments to their deal, such as changing from interest-only to a repayment method, extending or shortening the term of their mortgage or remortgaging with the same lender.

Association of Mortgage Intermediaries director Robert Sinclair says it seems illogical that so-called transactors would not be classed as advice givers.

He says: “Such tasks are rarely execution-only as the customer arrives with a problem and the lender representative provides a solution usually through verbal interaction.

“That this verbal interaction must be advice is a logical conclusion based on the new rules.”

He says the issue needs to be debated before the cut-off point for submissions to the MMR on March 30.

Sinclair is concerned that a debate is happening behind closed doors but says the issue needs to be discussed openly.

The MMR states: “We believe that in all sales where there is spoken or other interactive dialogue between the consumer and firm, the firm should assess whether the mortgage is appropriate for the consumer ­ i.e. advise the consumer.

“This will cover all forms of interactive dialogue, whether face-to-face, over the telephone or social media, or online propositions with the facility for live chats.”

A spokesman for the Council of Mortgage Lenders says: “There is clearly a distinction between a customer who is changing an aspect of their mortgage and one who is applying for a new loan.

“There is a case to be made that the person would not need to go through the advice process and we will be exploring this in our response to the MMR.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Message to the FSA

    Please stick to your guns as for too long you have listened to lenders on what they want – for once do what is right for the industry and ban non advice basis in respects to mortgages. We only have to look at the lending over the last 13 years pre-2007 to show that not regulating mortgage advice has caused horrendous problems. If lenders were held to account on their advice then maybe they would act more responsibly in the future.

    This will also force lenders to re-engage with brokers and give clients a better level of mortgage advice then is presently offered. It will also start to repair some of the damage from the RDR process that is affecting IFA’s as it would encourage people to seek independent financial advice.

  2. If IFAs have to be qualified to QCF level 4, I am damn sure that any bank/Building Society employee offering mortgage advice should have either the CeMAP or CII MAQ

    They have had the same amount of time to prepare for changes and why would any bank want to allow advice on mortgages to be given by unqualified staff /

    You could not make this rubbish up.

  3. FSA told me they needed to “bite the bullet”.

    So bite it.

  4. It would send out a terrible message if the FSA back down on this. Only then a short step from applying the same principle to everything else which would drive a coach and horses through the RDR.

    Don’t forget that it was the lack of effective regulation around mortgages that caused the financial crisis. This is no time for wavering.

  5. Casual Observer 13th March 2012 at 10:41 am

    The FSA have to be consistent in their approach so if they say any interaction is advice because that is how the consumer pereives it then surely they will have to apply the same approach to all other sales of financial services products since they have research that shows the same consumer view is held in those areas too.

    That will mean the end of buying your motor insurance and house insurance direct with no advice – unless it is online with no filtering.

    Looks like a great opportunity for general insurance intermediaries who can give advice as opposed to the insurers who aren’t geared up for that!

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