Sesame is calling on mortgage advisers to protect themselves against a potential rash of complaints caused by higher levels of irresponsible borrowing.
It says the credit crunch and turbulence in the hou-sing market could lead to a sharp increase in the number of repossessions, in turn leaving many borr-owers looking to shift the blame onto the lender or the adviser.
Sesame has issued a mortgage affordability White Paper which calls for clearer lines of responsibility to be drawn between the adviser, lender, regulatory and consumer perspectives.
It says that while the regulator is keen to highlight the responsibility of the lender and broker to prevent consumers borrowing more than they can afford to, it believes that the FSA also has a role to play.
Head of compliance services Neil Walkling says he believes mortgage advisers need to protect themselves.
Walkling says: “The cre-dit crunch has put the question of affordability firmly in the spotlight so it is vital for mortgage advisers to get the basics right such as robust affordability assessments and clear suitability letters.
“This means that consumers will be able to make informed decisions and avoid taking on commitments which they have no hope of meeting. But getting the basics wrong may have damaging consequences for both advisers and their clients.”
Walkling says these turbulent times offer good mortgage advisers a prime opportunity to demonstrate their value, giving them a source of competitive advantage over banks and big lenders.
He says: “In the end, if advisers believe customers have little chance of affording the repayments, then they must have the courage not to accept the business. In the long run, they will be acting not only in the customer’s best interest but also in their own.”