Lenders will not have to offer advice on their rivals’ products under the mortgage market review rules, the FSA has confirmed.
The new rules state that lenders must offer advice on mortgage sales except where there are contractual or administrative changes made to a mortgage contract, such as amending the term, switching the repayment method or porting a mortgage.
Lenders with only a single product, or with a limited range of products, have argued that it would not be possible to give advice, as they would only be assessing whether the customer had met their eligibility criteria.
However, the FSA says the lender would still be “steering” the customer towards a particular product, therefore this would still be considered advice.
Other lenders were concerned that only offering a limited product range would mean they would have to advise the customer to purchase a mortgage from another firm. However, the FSA says this is not the case.
The mortgage market review final rules, published today, say: “There is no requirement for the firm to advise on products offered by other firms.”
FSA director of conduct policy Sheila Nicoll says: “You cannot sell customers an unsuitable product. We are saying you have to be honest and if you only have one product and that is it, you have to say so if it is not suitable.”