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Mortgage advisers will have to pick one role

Mortgage advisers will be forced to choose between being an appointed representative of one firm selling its panel of products or be fully independent and directly authorised by the FSA from 2004, according to new proposals from the regulator.

The FSA consultation paper, published this week, says ARs can only have one principal company for ordinary mortgages although those also advising on equity release can tie to a separate firm for this part of their business.

An AR giving investment advice can only tie to one firm for this part of its business but in general insurance they can tie to up to 10 companies. The regulator has also ruled out an adviser being an AR for some business and independent for other parts.

Prudential Premier Mortgage Club national manager John Malone believes more advisers will choose independence rather than be restricted to one lender or a panel.

But others believe firms such as Legal & General and Zurich will be winners, building on their already strong position among ARs in the market.

Broker franchise Mortgageforce managing director Rob Clifford says: “There is a danger that lenders will be under the influence of powerful host companies.”

FSA spokesman David Cliffe says: “An adviser will have to chose to be an AR or independent across their business. They cannot be both.”

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