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Lenders urged to take responsibility for design flaws

The Association of Mortgage Intermediaries has called for lenders to take responsibility for any initial flaws in product design.

The call follows the Financial Service Authority’s discussion paper 06/4, which looks to the responsibilities of lenders and distributors for the fair treatment of customers.

AMI’s response to the discussion paper stems from its belief that lenders must not be able to “stand in splendid isolation” apart from problems with product design that arise following the sale of a product.

It also addresses the information gulf that has grown in the industry between lenders and brokers, which AMI says is hindering its members being able to accurately advise their clients.

AMI also reminds brokers to not shirk responsibility from any advice given, subject to the provision of clear information from lenders and insurers.

Rob Griffiths, associate director of AMI, says: “AMI is pleased the FSA has given its views on these respective responsibilities and, in general, supports the division of responsibilities in the paper.

“There are however some areas where we need to ensure there is a clear line between the respective responsibilities.

“We would not wish to see the emergence of action by lenders that intrudes into the client-adviser relationship, or behaviour where the selection process for distributors creates competitive distortion or jeopardises the independence of independent intermediaries.

“AMI intends to explore the responsibilities of mortgage lenders and brokers in the product life-cycle with the intermediary mortgage lenders association.

“We will consider the publication of a joint paper setting out our views at a more detailed level on the responsibilities of both a mortgage lender and intermediary.”


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