Within the RDR, although mortgage and insurance distribution is not explicitly analysed, the regulator has suggested that distribution for any IFA who also deals with mortgages and insurance could differ from that of mortgage or insurance brokers.
The FSA says: “Preliminary analysis of firms’ business models suggest that for example, some banks may consider reflecting the changes required for their investment distribution business by applying the same model to both investment and non-investment business.
“Similarly, insurance firms may decide to adopt the same model for distributing their investment and general insurance products.”
The regulator says this could impact mortgage and insurance product design.
Although IFA distribution of mortgages and insurance could change, the FSA revealed it will not be submitting the same scrutiny to mortgage distribution as it has to the investment distribution sector.
It says: “We are currently undertaking a thorough review of our mortgage regime. The purpose of the review is to establish the root causes of problems that continue to cause consumer detriment in the mortgage market.
“That work has identified a number of issues we want to consider further within the normal scope of our policy work. Our analysis has not so far identified a need to apply an RDR approach across that market.”
But it has admitted that eventual feedback from the RDR may lead to the mortgage distribution sector being put until the same microscope as the retail sector.