View more on these topics

Smee urges industry to go it alone if FSA scraps suitability

The FSA has come under significant pressure from trade bodies and product providers to change its decision to exclude suitability letters from its regime for mortgage intermediaries.

The regulator&#39s stance has led to Aifa director general Paul Smee&#39s call for the industry to produce its own suitability letter in the absence of leadership from the FSA.

Speaking at a panel session at this week&#39s Money Marketing Live event at Olympia in London, FSA manager Susan de Mont was told that for both intermediaries and consumers, the suitability letter is a key part of the advice process.

Prudential national mortgage manager John Malone asked why the FSA had decided to exclude from regulation what many advisers view as the most important disclosure document.

De Mont responded that brokers would not be prevented from giving clients such letters but stressed that there would just be no requirement to do so.

She said that brokers may very well want to keep a suitability letter on file but it did not follow that this needed to be passed on to the client.

Malone said: “Both consumers and intermediaries want something that final-ises the transaction.

“Suitability letters acc-omplish that. It is one of the most important documents in the advice process and consumers will always turn to it first.”

De Mont said: “We were not convinced that suitability letters do add much in terms of helping consumers. There are other more important types of disclosure. Our rules will not say that you cannot issue a suitability letter, they will just say that we will not require it.”

Intermediary Mortgage Lenders Association chairman John Heron said: “It is crucial that suitability letters are given consistently from one advised sale to the next.”

Aifa director general Paul Smee said: “If the FSA does not make it compulsory, then let&#39s make it an industrywide standard.”

Recommended

Close moves in on property

CLOSE PROPERTY INVESTMENT PROPERTY INVESTMENT PORTFOLIO Type: Offshore fund of funds Aim: Growth or income by investing in property funds Minimum investment: Lump sum £11,000, $15,000, euros 16,000 Place of registration: Isle of Man Investment split: Choice of freehold income trust, capital appreciation trust, active commercial estates plc, healthcare and leisure property fund, Close high […]

Action groups want judicial review unless watchdog speeds up Equitable claims

Two Equitable Life member action groups are considering taking the Financial Ombudsman Service to a judicial review unless the processing of their misselling compensation claims is speeded up.Equitable Late Joiners&#39 Action Group vice-president Paul Weir says there are still around 2,500 complaints with FOS and the group will take it to judicial review if there […]

Goodfellow takes chair

Skipton Building Society chief executive John Goodfellow has been elected as chairman of the Building Societies Association.He takes over from Britannia Building Society executive vice-chairman Graham Stow, who held the post for the past year.Goodfellow&#39s former role as BSA deputy chairman will be filled by Stroud & Swindon chief executive John Parker.Goodfellow has been chief […]

Liberty Ermitage – Liberty Ermitage Gold & Resources Fund

Type: Offshore Oeic Aim: Growth by investing in gold & precious metal stocks and specialist gold funds Minimum investment: Lump sum $15,000, £10,000, euros 15,000 Place of registration: Bermuda Investment split: 32% large caps, 15% mid caps, 12% small caps, 29% specialist gold funds, 3% financing, 9% cash Charges: Annual 0.5% Commission: Subject to negotiation […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment