MMR: Brokers will not need RDR like labels
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The Financial Services Authority has scrapped its proposal for brokers to be labeled as ‘independent’ or ‘restricted’ in the same way as advisers under the Retail Distribution Review.
The FSA says the term restricted could be misinterpreted as a description of the quality of advice rather than the range of products.
In light of this it has reconsidered whether using the independent and restricted labels is in fact the correct approach for the mortgage market.
It instead proposes that intermediaries who have limitations in their product range will either have to tell the consumer the number of lenders they sourced products from or list the name of each lender as part of their disclosure.
Where they opt to give the number, then they will also have to tell the consumer that they can request a list of these lenders, and provide this list on request.
This list should also indicate whether they offer all of the products generally available from these lenders.
The FSA has included some examples of what the disclosure could look like:
For example:
• ‘We are not limited in the range of mortgages we will consider for you’;
• ‘We only offer mortgages from [number] lender(s). We can provide you with a list
of these’;
• ‘We only offer some, but not all, of the mortgages available from [number] lender(s).
We can provide you with a list of these’;
• ‘We only offer mortgages from [name of lender(s)]’;
‘We only offer some, but not all, of the mortgages from [name of lender(s)]’.
The FSA also says it is important that consumers know that the intermediary does not consider direct-only deals and it therefore proposes to have a requirement that intermediaries disclose this fact to the consumer.
An example of what disclosure could like in such a case is,‘We offer a comprehensive range of mortgages from across the market, but not mortgages that you can only obtain by going direct to a lender’.
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