Plans to make every mortgage seller sit an exam could push lenders back into the arms of brokers to save money.
Last week at the Mortgage Business Expo, Sheila Nicoll, director of conduct policy at the Financial Services Authority, revealed plans to make every mortgage seller sit CeMAP, including those who work in call centres and lenders’ branches.
The proposals will form part of its distribution and disclosure consultation paper, which is expected to be released this week.
Nicoll says: “All mortgage sellers, not just advisers, will need to hold the Level 3 mortgage qualification. We expect this, in conjunction with the approved persons proposals, to have a positive impact on professional standards.”
Robert Sinclair, director of the Association of Mortgage Intermediaries, says this is good news for brokers.
He says: “It will cause lenders to rethink their distribution and look at whether a broker-led solution is more cost-effective, particularly with regard to remortgaging.”
He says lenders will have difficulty keeping down costs in their call centres and may be reluctant to pay to train staff in case they leave once they are qualified.
The FSA has also given brokers a smaller role in assessing borrower affordability.
Nicoll says: “Our view is that intermediaries do have a role to play in assessing affordability but that it should be limited to checking if the consumer fits the expected parameters of lenders’ affordability criteria. After all, it is the lender that has access to customers’ credit history and can request additional information if required.”
Brokers will instead be required to carry out eligibility and appropriateness tests on borrowers.
The FSA is proposing scrapping the Initial Disclosure Document. Instead, brokers will have to give borrowers information about products at an earlier stage in the process.
Nicoll says it has also recognised that the Key Facts Illustration has not proved successful when it comes to encouraging customers to shop around, so it will reassess at what stage the document is given to them.
The regulator is also looking at whether the labels of ’independent’ and ’restrictive’ advice can be applied to the mortgage market.
Nicoll says: “We see a case for applying these labels to the mortgage market. We recognise there are differences between the mortgage and investment markets.”