Industry split on the banning of non-advised sales
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Lenders and brokers are divided on whether non-advised sales in the mortgage market should be banned.
In feedback to the Financial Ser-vices Authority’s Mortgage Market Review proposals brokers have supported moves to create a fully advised market while lenders are more cautious.
Some lenders support a ban on non-advised sales for brokers and one lender has suggested execution-only sales as an alternative.
Several respondents, including lenders, support advised sales as the default route for vulnerable con-sumers, but with an opt-in facility for non-advised sales for more savvy consumers.
Platform Home Loans is spearheading Mortgage Strategy’s Define Advice campaign, which aims to educate the public on the benefits of using brokers for mortgage advice.
The industry’s MMR feedback also shows that an overwhelming majority of respondents are in favour of lenders taking overall responsibility for assessing borro-wer affordability.
But in a statement the regulator says: “We are concerned that making lenders responsible for the lending decision could be inter-preted as implying that inter-mediaries, other professionals and, crucially, consumers have no responsibility at all.”
It says that to avoid this, some respondents have suggested that the FSA make the underwriting decision more transparent by ensuring lenders disclose the affordability assessment and require consumers to take responsibility for the information they provide.
The FSA plans to publish a policy statement in June for arrears and approved persons, outlining the rule changes to emerge from the MMR.
It will launch a further two consultation papers later this year. The first due in Q3 will cover the regulator’s top priorities such as income verification and affordability assessments, non-deposit-taking lenders and product regulation.
The second one expected in Q4 will address issues such as selling standards and broker affordability assessments.
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