Any move by the Financial Conduct Authority to ban procuration fees in favour of charging for advice would be harmful to consumers, the Association of Mortgage Intermediaries has warned.
The regulator is currently looking at proc fees as part of a wider consultation mortgage remuneration.
The latest AMI quarterly review says: “In order to pay for the cost of giving advice – and the cost of advice given on applications that do not complete, removing proc fees in favour of charging the customer is likely to deprive the most vulnerable from advice they badly need.
“This is particularly troublesome in a market where the most vulnerable customers may have to take advice to purchase a product but cannot afford the advice in order to do so.”
The broker trade body says a referral fee system is also problematic.
AMI says: “Advice is currently regulated in siloes, necessitating multiple qualifications, permissions and regulatory fees for advisers wishing to operate across multiple siloes.
“In order to minimise cost and risk within the constrictions of existing regulation, but not compromise on the quality and breadth of advice given to customers, advisers have adopted a referral structure. This serves customer needs well and allows advisers to remain commercially viable.”
AMI says its members increasingly feel pressure to secure permissions across mortgages, consumer credit, debt consolidation, retirement and investment.
The trade body adds: “AMI would like to see clarity issued by the regulator on what components of the interaction between adviser and client constitutes advice across all of the areas of need that the average consumer has. These dynamics are intrinsic to assessing the need for referral fees in the market.”