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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.”


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