The Council of Mortgage Lenders has gone head-to-head with the Association of Mortgage Intermediaries in its response to the Mortgage Market Review, each fighting their corner on what should be classed as advice.
Last month Mortgage Strategy reported that lenders had lobbied the Financial Services Authority to exempt hundreds of their call centre staff from having to be CeMAP-qualified to offer advice.
In its response to the MMR last week the CML claimed the proposals will reduce efficiency and increase costs for lenders, and may result in them lending less.
The CML says: “Lenders that have chosen not to distribute via intermediaries will be impacted most severely and we think new entrants looking at offering sales directly to borrowers may find the entry costs significantly increased, particularly if their application was started under the current Mortgage Conduct of Business rules.”
It estimates that the average advised sale may take up to 1.7 hours longer than a non-advised equivalent and argues that lenders would not be able to adapt to the changes in the 12 months the MMR proposes.
The CML also believes that making advice compulsory for arrears handling could have a major impact on third party servicers.
But AMI’s response is that although lenders will see pressures on their business models, this should not deter the FSA from doing what is right for consumers.
AMI says: “We believe that on balance these changes are justified. Some will argue that putting all consumers through an advice process will unduly lengthen it for many.
However, when we have gone through lender-based non-advised processes, these are little different in time and complexity from an advised interview.”
AMI also fears there is a clash between the MMR proposals and the European mortgage directive.