An article by Neal Smith entitled ‘The business of Terms of Business’ (Mortgage Strategy, December 6, p42) has underneath it ‘Mortgage Master or Mortgage Moron’. The juxtaposition of these two show a lack of appreciation of the FSA’s rules, even among experts.
Smith says issuing an Initial Disclosure Document to a customer who requires a buy-to-let mortgage could lead them to believe the product they is regulated by the FSA. He suggests that a Terms of Business letter be issued instead so that the customer is left in no doubt that the product is not regulated.
This advice flies in the face of the FSA’s instructions that the IDD has to be the first document to be given to the customer (or contains the first information to be discussed with the customer if they are not face to face). The IDD must be given before any personal information is taken from the customer. If not then the adviser will be unable to determine if the product required will be regulated or not.
The answer to question two in Mortgage Master or Mortgage Moron confirms this view.
Western Mortgage Brokers Limited