From Scott Mowbray
The FSA has followed the Treasury's lead and adopted a largely common-sense approach. Regulation of advice should help boost consumer confidence. No longer will anyone be able to say that mortgage brokers are ex-IFAs who couldn't pass exams! The cost to a client of buying an inappropriate mortgage can be high and good quality advice is essential for the mortgage market to operate with the interest of the customer in mind.
But there is one area where we believe the FSA has taken a step backwards. The proposal that 'reason why' letters should be abandoned will make the complaint process that much more difficult and contentious for lenders and borrowers and does not seem in the best interests of either.
But regulation should not be the only way to improve the quality of the mortgage-buying process. Educating customers is also crucial. Without this, there is a danger that every customer who becomes disillusioned with their mortgage can simply claim they knew nothing about what they were buying and place all responsibility on the adviser – and seek compensation. Information produced by mortgage providers should be as straightforward as possible.