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MMR: Ami slams ‘weak’ non-advised sales ban

The Association of Mortgage Intermediaries has slammed the FSA for excluding contract variations from the non-advised sales ban.

In its last mortgage market review consultation paper, which was published in December, the FSA proposed that non-advised sales should be banned where there was any form of “interactive dialogue” between a customer and a lender.

Lenders raised concerns about administrative staff being captured by the proposals in the December paper and have lobbied for an exemption to be made for these people. They also argued the rule would contradict the FSA’s approved persons rules, which state back office staff and those involved in post-completion activities would not have to be individually registered.

In a policy document published today, which outlines the FSA’s final rules for the regulation of the mortgage market, the regulator confirmed that sales would only have to be advised if the lender has “steered” a customer towards a product – or set of products – or where the customer wants a further advance.

As long as the consumer does not want to borrow more, contract variations like changing the payment method, rate switches and retention deals or porting the mortgage can be done on an execution-only basis. Forbearance would also be exempt from the non-advised ban.

Furthermore, lenders will be able to write to a customer presenting all of the products available to them and it will be accepted as a non-advised sale as long as the lender does not “steer” a customer towards a certain product and the customer makes up their own mind.

Ami chief executive Sinclair says: “I genuinely think this will be bad for consumers and the FSA has not gone far enough. I remain to be convinced this is enough to protect consumers. I think allowing a consumer to just tick a box without fully understanding the consequences is a weakness in the proposals.

“Lenders will not have to do an awful lot when a borrower comes to the end of a loan, they just have to make them aware of the products available and then the customer picks. I think that is a bit weak.”

The new MMR rules come into effect on 26 April 2014.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. “A bit weak” is an understatement. Porting should absolutely be an advised sale and most product transfers/retention deals involve advice.

    I think that the FSA have allowed themselves to be hoodwinked into kow-towing to lenders’ addiction to non-advised sales.

  2. I totally agree. Many of the ‘porting’ products are below par for the borrower and by ‘ticking a box’ they are perhaps locking themselves into an unsuitable mortgage for maybe up to 7 years without advice. FSA + Banks = hoodwinked/miss sell!

  3. Posted this on the other article dealing with this subject and thought it to be relevent

    Why is Sheila Nicoll still at the FSA? surely she should have gone with her chum Hector Sante.

    The fact is Sheila Nicoll was part of the organisation that was responsible for tick box regulation and did little to govern the banks correctly.

    These initial proposals were welcome by brokers as many individuals amending a mortgage, do need advice as they are too often ripped off by banks. The fact is banks and building societies will use these watered down proposals to carry on giving terrible advice or should I say non advice to millions of consumers. Which I’m afraid may also mean that we end up repeating the mistakes of the last 30 years as soon as they have repaired their balance sheets and feel it’s safe to return to reckless lending.

    The fact is that these initial proposals forced banks to provide better training to it’s staff and also to work in partnership with brokers. I don’t know about everybody else, but over the last 5 years, the major four banks have consistently launched direct deals in an attempt to put brokers out of business. The fact is with these new proposals banks would have needed us as they were ill equipped to fill the advice gap.

    Get rid of Sheila Nicoll as she obviously is not on the IFA’s side and is quite biased towards lenders.

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