The regulator outlined plans to remove the non-advised sales process and said all sales should be advised where there is any interaction between advisers and clients – no matter whether it’s over the phone, face-to-face, social media or live chats online.
Execution-only would be effectively banned, bar for high net worth and professional borrowers who have a background in finance, and for postal and internet sales where there is no interaction with the lender other than transacting the deal.
This was a hallelujah moment for brokers. As the FSA says, if consumers go to a lender’s branch and speak to an adviser, they believe they’ve been given advice, even if the lender insists they haven’t. It confuses consumers and the FSA was right to dump it.
But it will have major consequences for lenders financially, with increased training posing a headache. So it was hardly surprising to see both the Council of Mortgage Lenders and Building Societies Association protect their respective members’ interests last week with their responses to the consultation paper.
The BSA lambasted the MMR for being broker-centric and the CML claimed it will add one hour 42 minutes to the whole process, with lenders facing reduced sales or, God forbid, using brokers. Irrespective of the fact that brokers could potentially gain a lot from this scenario, the concept of enshrining advice as something all consumers have a right to expect is a good one.
The trade bodies have said their pieces, but we can only hope that when it comes to axing non-advised sales, the regulator ignores the banks’ financial considerations and sticks to its guns.