Professionals such as solicitors will need authorisation or appointed representative status if they recommend a particular mortgage product, the Treasury announced today.
Most respondents to the Treasury's consultation paper agreed that solicitors undertaking conveyancing should not be required to be authorised merely because they offered general advice to the borrower, but that they should if making a positive recommendation of the products of a particular lender.
But other respondents were not convinced that mortgage advice should be treated in the same way as investment advice, because mortgage advice did not require as high a level of knowledge and competence.
Some added that a mortgage does not necessarily attract the same risks to clients as selecting some forms of investments, and expressed concern that the Treasury's proposals would restrict the market and remove a source of objective consumer advice from professional advisers. In addition, some pointed out that they would appear to restrict professional firms from providing advice in conjunction with a Power of Attorney.
Some respondents even rejected the proposal that professionals should be exempted form authorisation, on the grounds that they are unlikely to have received any training in the wide range of retail financial products and services and may give inappropriate advice. Given the general move to improve standards in the intermediary sector, this was considered contradictory.
The Treasury says it could see both sides of the argument, but says: “The right balance has been struck between the ability of professionals to advice their clients without fear of contravening FSA rules, and the appropriate level of consumer protection.”