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Financial Services Consumer Panel criticises ban on non-advised sales

The Financial Services Consumer Panel has criticised Financial Services Authority proposals to ban non-advised sales.

In the final Mortgage Market Review consultation paper the FSA proposes making the vast majority or mortgage sales advised to avoid customer confusion over whether advice has been given or not.

The FSCP is an independent statutory body set up to represent the interests of consumers in the development of policy for the regulation of financial services.

In its response to the paper the FSCP argues that advice would be unnecessary for the majority of mortgage customers.

Adam Phillips, chairman of the FSCP, says the new rules have gone too far and there is evidence the majority of consumers understand the process.

He says: “Consumers need honest and straightforward disclosure with clarity and transparency but if they have already bought a mortgage they should be able to do it again without being advised.

“The FSA is potentially confusing a request for information with advice and that makes shopping around and the buying process more difficult. The requirements should be limited to those customers who are credit-impaired, equity release, sale and rent back, right to buy and potentially first-time buyers. These are a group of people that may need advice but not the majority of people.”

Phillips says buyers who shop around could be forced to take advice two or three times before getting a deal.

He adds: “The seller will have to demonstrate to the FSA that it has advised the customer which is the problem with regulating advice.

“It’s a reasonable to ask about what the right amount of advice should be but for people with experience or remortgaging there is not much evidence that they were mis-sold.”




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  • Chris Gardner 5th April 2012 at 4:29 pm

    @Luke Atkinson | 5 Apr 2012 2:25 pm

    Luke i am neither. I left the industry last year.

    There is nothing expert about broking Luke. The sourcing is done electronically, then the broker uses a bit of nouse and experience to know what lenders will do what “mmm this looks like an abbey deal” or such like.

    A vast majority of customers are doing little more than delegating legwork to a broker. No issues with that – seems like a perfect example of a capitalist market functioning – but i ask again, why the ponsie self-importance from some of the broker fraternity?? Its pathetic.

  • Luke Atkinson 5th April 2012 at 2:25 pm

    @ Chris Gardner

    Do you work in a Bank or an estate agency?

    I agree that you need to be a competent sales person but if you under sell yourself as just a salesperson or the service you are providing as just another close, you run the risk of your ”customers” seeing you in that light as well.

    You are the professional and the expert, you are providing a service and provided the service you offer is at a high enough level, this will be reciprocated in the way the consumer thinks of you.

    The people I am still in contact with in a mortgage adviser role feel the same.

  • Chris Gardner 5th April 2012 at 9:28 am

    Reading through the coments i repeatedly see brokers referring to themselves in such grand terms – “practitioners”, and the like. Its codswallop.

    This is half of the problem – mortgage brokers are salespeople (nothing wrong with that at all) and the purpose of regulation is to ensure that customers (yes, customers, they are not clients, solicitors and accountants have clients, not us sales people – we have customers) were not shafted by an over zealous quest to make a sale. It is disingenuous to scrub it up as anything else.

    The sooner the flannel and nonsense is swept away from the broker market, the better for everyone.

  • C jones 4th April 2012 at 7:16 pm

    Glen is pretty much spot on. Although the fundamental assumption he has made is that we live in a free country. Unfortunately the freedoms we used to have such as privacy and taking responsibilty for our own actions have
    been so eroded in recent years we are left with a nanny state forcing advice on us whilst listening to all our phone conversations and reading all our emails. Glen, we do not live in a free country and the Fsa plays it’s part very well on behalf of any controlling government. When Gordon brown decided to embark on the biggest boom in history he couldnt have done it without the Fsa seemingly ignoring basic economics. Likewise when we now apparently need austerity the Fsa all of a sudden has a eureka moment and steps in to ensure tough lending criteria. What we have is a controlled freedom at best and the Fsa plays to the governments tune of the day. Simples !

  • AP 4th April 2012 at 9:28 am

    Glenn is spot on. People make an informed decision at the time. Advisers advise, customers decide. And then forget.

    A point which is being overlooked is who is going to pay for all this duplicated advice? Many customers will want to talk to lenders directly because of dual pricing. Is the mortgage broker going to advise them once, and then the lender going to do it all again.. Guess which one won’t be getting paid by anyone, Brokers will give up two hours on every speculative enquiry in a market that is loaded against them by the very suppliers whose products they are advising on.

    Tesco are still hiring, better money working on the tills there than there will be in mortgage broking.

  • W Hood 3rd April 2012 at 3:43 pm

    Unbelievable. I thought these days nothing could surprise me, however I had to read the article twice as i did not believe Adam Phillips could be so wrong and/or stupid. An opportunity to finally bring advise to all and he condemns out of hand. I believe he should consider his position at FSCP…………or perhaps he already has and is looking to the future?

  • HW 3rd April 2012 at 3:20 pm

    Is this the same FSCP that two weeks ago was campaigning for full responsibility for sales should be borne by the adviser as the public could not be expected to understand financial advise? What a change of tune!

  • Chris Gardner 3rd April 2012 at 3:07 pm

    @Glen McKeown | 3 Apr 2012 1:50 pm

    i was about to post the same comment, or at least with the same sentiment – however you have made it far more elegantly.

    well done glen

  • Dazed & Confused 3rd April 2012 at 3:06 pm

    “In its response to the paper the FSCP argues that advice would be unnecessary for the majority of mortgage customers.”

    Oh well, I am sure that the FOS will find that information most useful! If the majority of consumers understand the Mortgage buying process, it should mean that the majority of Mortgage mis-selling complaints can now be ignored!

    Still…that won’t happen will it?

  • Dave 3rd April 2012 at 2:06 pm

    The FSCP couldn’t be more WRONG – as each of the comments from professional practitioners above confirms.

  • Glen McKeown 3rd April 2012 at 1:50 pm

    There is a massive level of arrogance embedded in most of these comments. It is based on the “we know better than you” syndrome.
    I would certainly support the call for some quality research in this area, since it could well undermine the sanctimonious attitude of many advisers.
    Whilst I was at school I was particularly good at calculus. A few years later I picked up a book on calculus and could not remember the first thing about it. I suspect a similar process occurs with the purchasers of financial products. Advisers know the products because they work with them day in and day out. Consumers take on board the knowledge only for the time it is required.
    What you are implying in your assessments is that consumers are too stupid to make a decision because they do not remember at a later date what they fully understand at the time the decision way made.
    I suspect that a sizeable portion of those using advisers are less interested in the advice than they are in delegating all the administration associated with the research and the implementation; but they are well aware of the decision being made. As are people who do everything themselves. Your comments are basically sneering at these people. They are, according to you too stupid to know what they are doing.
    That is an assessment that says more about the people making it, explicitly or implicitly, than the people about whom it is made.
    Advice is valuable, especially quality advice. But it should not be a compulsion. That is not how a free society works. People should even be allowed to make their own mistakes. Advisers will give bad advice, sometimes through negligence and sometimes by accident. Nothing is perfect, and nothing will be perfect. To aim for perfection is to create a cost burden that is more damaging than the damage it trying to avoid.
    The FSA is deifying advice, and advisers are following them down that blind ally. Advice is a commercial service not a religion. For once the FSCP have raised a point worth discussing. I doubt that many will enter that discussion from either side of the regulatory divide because it doesn’t gel with currently held prejudices.

  • Bill Warren 3rd April 2012 at 12:43 pm

    I like the other silver headed gent earlier have been in the mortgage arena for over 40 years and it is true so many borrowers don’t know or cant remember what they have.What really worries me about these comments is that they come from an organisation that is supposed to be protecting the consumer,as a statutory body are they selected and approved by the FSA as they seem not to be in touch with those consumers that need support.

  • David Winder 3rd April 2012 at 12:13 pm

    If the FSCP are so sure that most customers dont need advice why dont they organise an independent test. I see customers who have an a mortgage for 20 years who dont know what kind of mortgage they have, and what other kinds might be more suitable.

    Its quite clear based on its comments that the FSCP is the CML in another hat.

  • Phil 3rd April 2012 at 12:12 pm

    Adam Phillips, chairman of the FSCP, says the new rules have gone too far and there is evidence the majority of consumers understand the process.

    Is Mr Phillips not contradicting himself in his statement I believe full advice is being introduced to protect ALL CLIENTS
    What about those clients who dont understand the process and take out an exercution only mortgage – or dont they count
    A remortgage is a chance for the client to check where he is up to financially and at this point a lot of things may have changed in their situation from when they first took out the mortgage out ie job, salary, lifstyle, marital status, family -so it is just as impoortant to have the advice at this point than it is at the start
    Mr Phillips also says
    It’s a reasonable to ask about what the right amount of advice should be but for people with experience or remortgaging there is not much evidence that they were mis-sold.”
    How can they prove they were mis-sold if it was an exectution or limited advice only deal Mr Phillips or am I missing something

  • Des Platt 3rd April 2012 at 11:55 am

    I find the area where clients really need advice is protection. So often they don’t know what they already have and the difference between MPPI, critical illness, serious illness, income protection etc. The banks and building societies always flog MPPI and crit even where PHI is far more appropriate.

  • Silver haired broker 3rd April 2012 at 11:45 am

    Read an argument in support of non advised sales yesterday that to make non advised sales into advised sales would take an extra 1 hour 42 minutes.
    Why is that a problem when people are making the biggest purchase in their lives? Just typifies the non advised process they come first the client second.

  • Stuart Duncan 3rd April 2012 at 11:42 am

    I simply find that a bizarre view.

    I can honestly say that every client I deal with benefits from having advice. Some need it more than others but, for example, I just came out of an appointment where the clients did not know that getting quotes from insurance comparison sites often involves multiple credit checks that can severely damage one’s credit file..

    The FSCP view is based on a falsely optimistic view of the levels of financial awareness in the UK.

    If, as they say, people just want information, there are plenty of channels for obtaining that. This is simply a non-argument.

  • Mike Snorkins 3rd April 2012 at 11:39 am

    Same Old Same… As expected, it looks like the banks will win this argument about a non-advised service. Even the ‘consumer’ is backing them (not inverted commas). I wonder how they managed to ‘influence’ FSCP. According to them, most consumers understand the process. I wonder if the same logic will apply to independent mortgage advice? Anwers on a postcard please.

  • John Lacy 3rd April 2012 at 11:26 am

    What a load of cobblers!
    I regularly meet people who don’t know whether they’ve got a repayment or an interest only mortgage never mind whether it’s got any early redemption penalties.
    The general public would not deal with mortgage finance more than once every 2 years any very often much more infrequently. Under these circumstances I don’t believe that most people would find the deal that they want without professional help.