Writing this in the wake of the publication of our latest Mortgage Market Review consultation paper, I am glad to see the interest and response it has generated.
I am especially pleased the Association of Mortgage Intermediaries has given our proposals a welcome, albeit a cautious one.
This is important as we are clear the changes we suggest are not an attempt to downgrade the importance of mortgage brokers.
We recognise the crucial role of they should remain at the heart of the mortgage market.
But we are equally clear it is mortgage lenders that should be responsible for their lending decisions.
That’s why our proposals build on the emphasis we’ve already put on lenders by giving them, and not brokers, regulatory responsibility for checking affordability.
Of course, in practice brokers will continue to carry out affordability checks to make sure their clients fit lender criteria, but the final responsibility will lie with lenders. We hope this clears up a situation that has become blurred.
We are proposing a requirement for all sellers of mortgages – both brokers and staff in bank branches or call centres – to ensure the mortgage is appropriate for the customer.
We plan to strengthen this appropriateness test for borrowers looking to take out a mortgage beyond their planned retirement age and for those considering remortgaging so consideration is given to a further advance on their existing mortgage.
Our plan to make sure all mortgage sellers get a QCF Level 3 qualification – the same level as CeMAP – should further increase sales standards.
We also look at disclosure, with emphasis on giving consumers key information on scope and service early on, without mandating how that information should be given and reducing the information overload on consumers by cleaning up when they receive Key Facts Illustrations.
One change here is that intermediaries will not have to provide customers with a KFI, where they recommend a product that’s only available direct from a lender.
Our proposals set out how firms can describe their services, with two options – ’independent’ or ’restricted’.
Independent brokers will no longer have to offer their clients a fee option, although they will be required to disclose whether or not they will be considering lenders’ direct-only deals.
You can read the paper in full on our website, with the consultation open until 25 February 2011.
Next month we start our roadshows, where we’ll be explaining our proposals and hearing views from the audience.
You can book your free place for the roadshows through our website – just look for the link under the events diary section on our homepage.