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Stop the secretisation

I was impressed by the comments from Michael White of Email Mortgages regarding the destruction of advised choice by lenders.

There are lenders using Government backing as a sales opportunity for ancillary insurance cross-sales and sticking a “non-advised” label on everything they do. A survey found that many consumers subjected to this process were convinced they were receiving insurance advice when they were not.

Millions of pounds have been spent on the RDR and it is already under attack from all quarters, including some of those who stand to gain by it (the providers).

The FSA have placed their stamp of approval on dual-pricing and execution-only mortgage sales by failing to insist on the availability of an advised option for all mortgage deals and by quietly amending “non-advised” to “execution-only”.

If anyone thinks this is not the case, then take a look at the Moneymadeclear website and its description of distribution routes. Check out the comparison tables for MPPI a fairly simple product. You will see the future of financial advice for the poor – execution-only, buyer-beware chaos. I challenge anyone to defend it as a consumer tool.

The other issue is the failure of the FSA to address the “secretisation” of direct mortgage deals. If lenders refuse to make criteria freely available for direct deals and deny access to KFIs on these deals, they are denying the public proper access to independent advice and, because the FSA have made it a condition of providing mortgage advice that a KFI is issued prior to application, they are responsible for restraint of trade.

As a mortgage intermediary, I am required to research and recommend appropriate products and provide compliant documentation. In a market that has been reduced to pile-it-high-and-sell-it-cheap, as long as no advice is involved, I am unable to carry out my function.

I said almost a year ago that brokers should be compensated for dual-pricing, as it stops us from doing the job in the manner expected by our clients and demanded by our regulators. Eleven months on, the mortgage market has been reduced to the shambles of an execution-only selling process and mortgage intermediaries are being consistently betrayed by regulators and lenders who claim to be in favour of advice and that they remain committed to the intermediary market.

The FSA has let the situation slide into anarchy.

I do not believe the public want to feed their details into a website and buy complex financial products without advice but that is where the whole direct-deal, execution-only drive is headed. Nor do they need to call a freefone telesales outfit that uses tried and tested sales scripts to persuade them to buy products that may not fit their demands, needs or future financial wellbeing.

I call on the AMI to demand a consistent and consumer-orientated approach to mortgage and insurance distribution and on the Government to insist the FSA carries out its regulatory obligations to prevent consumer detriment.

Stuart Duncan

Taylor Engley Mortgage Services


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