The FSA has identified three types of sales process in the mortgage market.
These distinguish between advice and non-advice, and as such will attract different regulatory responses.
The three sales processes are:
- advised sales - here, the FSA proposes to use the definition of advice set out in the legislation, that is, advice on the merits of taking a particular mortgage
- non-advised sales using filtering questions - where the lender of intermediary uses filtering questions to narrow down the selection of mortgages on which it provides a consumer with information but does not make any recommendation
- non-advised executive-only sales - where the consumer has decided which mortgage they want, filtering questions are not used by the lender or intermediary firm and no advice is given.
The FSA decided to include the filtering questioning route after finding a “large proportion of mortgage sales may not involve 'advice' as defined in the legislation”.
The consultation asks whether filtering questions should be scripted and supervised in an effort to stop staff crossing the boundary between non-advice and advice.