The trade association’s response to the Financial Services Authority’s Discussion Paper 06/4 outlines its problem with lenders that “stand in splendid isolation” from problems with product design that arise following a sale.
The FSA paper was published to examine the responsibility of lenders and distributors when it comes to the treatment of clients as part of its Treating Customers Fairly initiative.
In its response, AMI also addresses the information gulf that has grown in the industry between lenders and brokers, which the trade body says is hindering its members in being able to accurately advise their clients.
Rob Griffiths, associate director of AMI, says: “There are some areas where we must ensure there is a clear line between responsibilities. We would not wish to see action by lenders that may intrude on the client-adviser relationship.
“AMI intends to explore the responsibilities of lenders and brokers in the product life cycle with the Intermediary Mortgage Lenders Association. We will consider the publication of a joint paper setting out our views in more detail.”
The Council of Mortgage Len-ders agrees there must be clear lines of responsibility between lenders and brokers. But it says the FSA must give guidance on this issue and clarify what it expects. This will allow firms to judge what they have to do in response.
David Hollingworth, mortgage specialist at London & Country, says: “Lenders and brokers must share the responsibility for a failing product just as the accolade of a successful one is shared. Designers should not run for the hills if something goes wrong. This is a partnership so we must both shoulder any blame.”