U-turn on advice would need new consultation

If the Financial Services Authority were to do a U-turn on its proposals for non-advised sales it would have to consult the industry again, says the Association of Mortgage Intermediaries.

The regulator issued what was meant to be its last Mortgage Market Review consultation paper in December 2011, in which it called for non-advised sales to be banned.

It wants to see mortgage sales carried out on either an advised basis, or execution-only for high net worth and financial professionals.

But lender trade bodies are fighting for this proposal to be scrapped, as it would mean them having to train thousands of staff
AMI director Robert Sinclair says the fight is not over until the FSA brings out its final policy rules, which are expected in the summer.

He says: “I am fairly confident that if the FSA decides not to stick with its current proposals on advice it will need to consult the industry again.

“A number of MMR proposals are interlinked, so the regulator would need to go back and look at the whole thing again.”

Sinclair says if lender trade bodies are not happy with how the FSA has defined advice it would be a good idea for them to come up with a definition.

He says: “We are hoping to have discussions with the Council of Mortgage Lenders and the Building Societies Association to find some common ground between advised sales and execution-only.”

The Financial Services Consumer Panel came out in favour of non-advised sales in its feedback to the MMR last week.

The FSCP is an independent statutory body set up to represent the interests of consumers in the development of policy for the regulation of financial services.

Adam Phillips, chairman of the FSCP, says the new rules have gone too far.

He says: “The FSA is potentially confusing a request for information with advice and that makes shopping around and the buying process more difficult.

“The requirements should be limited to those customers who are credit-impaired, equity release, sale-and-rent-back, Right to Buy and potentially first-time buyers.”

He adds: “These are the groups of people who may need advice but the majority of individuals will not.”