Brokers have been urged to review their current business model to ensure dealings with clients are transparent and fair or risk attracting the attentions of the Financial Services Authority’s Retail Distribution Review.
Peter Mann, chief executive of Bankhall, says that with the RDR, the question wasn’t would it affect the mortgage market but why wouldn’t it?
Mann highlighted customer agreed remuneration, increased qualification hurdles, the sustainability of the distribution sector, increased risk-based capital requirements and risk-based supervision as the issues most likely to affect brokers.
He says: “I believe the FSA are not concerned whether advisers are remunerated with fees or commission as long as they are clear and open in their dealings.
“Advisers receiving ongoing fees must be seen to have an ongoing relationship with their client.”
He adds: “The FSA’s thematic work on mortgage advice continues and the results continue to be disappointing. Its mortgage quality of advice review has highlighted areas of concern and market movements may force change.
“The FSA plans to produce another review in June 2008 as it continues to have concerns, therefore I would suggest you review your business model before someone else does.”