FSA calls for European directive to widen scope on lender advice
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Mortgage lenders should still be able to say they offer advice even if they do not compare products from across the whole market, says the Financial Services Authority.
Speaking at the Council of Mortgage Lenders’ Mortgage Industry Conference and Exhibition last week, Sheila Nicoll, director of conduct policy at the FSA, called for the European mortgage directive to be changed so lenders can claim they offer advice even if they are just advising on their own products.
She told delegates: “As first drafted, the European proposal means that only those firms that look across the whole of the market can give advice. We think this is a much too narrow view.
“In the UK market, around 50% of consumers who buy directly from a lender benefit from that lender providing advice on the best product in their range.”
She says there are also consumers who benefit from advice from intermediaries with a limited range of products.
Robert Sinclair, director of the Association of Mortgage Intermediaries, has been pushing for the directive to maintain its stance on advice.
He says: “I think the desire of our regulator to muddy the waters is interesting. I have seen nothing in the directive that would cause brokers problems from its definition of advice.”
He adds that it is too early to speculate about what will and will not be included in the directive.
Nicoll also raised concerns about the directive’s impact on niche areas such as bridging finance and high net worth borrowers.
She told delegates: “These are areas that require a tailored approach which recognises their different characteristics.
“Given that cross-border sales in these types of lending is unlikely, we think it more proportionate to let member states deal with them at the national level.”
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