The Chartered Insurance Institute has raised concerns that the FSA's plans for mortgage regulation could result in consumer confusion and, at worst, mis-selling.
In CP146, the FSA proposes that training and competence in the form of a formal examination is not required for non-advised mortgage sales other than lifetime mortgages, but CII director-general Dr Sandy Scott warns this could distort advice.
He says: “If the current recommendations are adopted we believe that, in order to avoid the extra training and/or examination required, firms could potentially offer a level of advice that does not meet the consumer's needs. We believe this could lead to confusion for consumers with the potential for mis-selling.”
The CII is particularly concerned about consumers who would benefit from more advanced mortgage arrangements but may be advised on simpler products because they are the only products the adviser is qualified to advise on. The CII, which itself runs the Mortgage Advice Qualification (MAQ) exams, is calling for the FSA to commit to formal training, competence and examination beyond the commitments stated in CP146 and to implement an ongoing competency system with specialist modules for higher-risk mortgage products such as equity release.
Scott adds: “We believe that exams on their own can give too narrow a view of an individual's competence. Likewise, maintaining a competence system without formal qualification is unlikely to give consumers sufficient confidence. We are, therefore, calling for an approach that has both core elements. We are also suggesting that 'top-up' qualifications need not necessarily involve an exam but could be achieved through an assessment.”