On my return from a week-long break I was actually looking forward to opening my emails to see if I had received any from mortgaging sourcing software companies with regard to my article earlier this month (Mortgage Strategy November 3).
Sadly, aside from emails regarding incoming regulation and the use of mortgage panels (to which I will reply shortly) I am still awaiting – with eager anticipation – contact from any intrepid company out there on the subject of an infallible sourcing system and will keep you updated if anything interesting in that line comes my way.
In the meantime my advice has to remain the same following the Mortgage Code Arbitration Scheme's recent award – check with the lender the features of the deal you are recommending and do not rely on the information contained in the sourcing software's product illustration.
Without wishing to appear as though I am using this as an opportunity to promote the merits of the appointed representative route, I believe the MCAS decision will ultimately hit those who choose the direct authorisation route the hardest.
Obviously it will be in the best interests of a principal to spend a great deal of time, effort and cash on establishing compliant technology – most particularly in regard to their sourcing system.
My concern is for those who opt for direct authorisation – will they have the necessary resources available to undertake such necessary research into their own technology? This factor should in no way be belittled as once you begin to recommend products, the proverbial buck really does stop with you.
Be warned, the FSA could be looking to make examples of advisers post-Mortgage Day and this MCAS award should function as a timely reminder of that.
The MCAS decision is still proving to be contentious and I will not be at all surprised to learn of similar cases going to the arbitration scheme.
Certainly any adviser purporting to offer a 'whole of market service' from now on must do so with caution.
With mortgage products appearing with frightening regularity it is an arduous task for an adviser to keep updated on every single offering on the market at the time of making recommendations.
This might sound pedantic but remember, in the recent case the client subsequently undertook his own investigation to establish whether he had received advice from the whole of the market – a telling example of the complaint driven society we now live in.
Fundamentally this poses the question – can any adviser genuinely offer a whole of market service? You may utilise sourcing software and have available best buy tables such as those contained in Mortgage Strategy but can you be certain that this information comprises every single product from every single lender?
Again I would recommend that you look to the MCCB Mortgage Sales Process Guide for guidance in this area.
In light of the MCAS decision, offering no panel and regular access to the whole of the market could cause problems in the future. One course of action could be to explain to the customer that you would like to look at the products of every single provider but that this is not always literally possible as you cannot rule out a recondite provider/club having made available a product of which you are unaware.
Your terms of business letter – and indeed your suitability letter – should also confirm that the lender and product were chosen after comparing the mortgage product types offered by a range of mortgage lenders.
I do not believe that, by taking such action, you will lose the kudos of your independent status – you are merely stating the difficulties of offering a whole of market service and taking precautionary steps to avoid any complaints in the future.
If there is a particular subject you would like me to cover in these columns please feel free to email me at the usual address and don't forget, I am particularly keen to hear from you mortgage sourcing software companies out there.