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AMI calls for compulsory advice in MMR response

The Association of Mortgage Intermediaries has put forward the case for compulsory advice in its response to the Mortgage Market Review’s distribution paper.

The trade body has submitted its response to the Financial Services Authority consultation today and in it argues that there is a strong case for making advice compulsory for all if not some at risk groups such as credit impaired, borrowing into retirement and first-time buyers.  

The trade body says the new proposals on appropriateness and affordability might make it difficult for consumers to identify the difference between the two processes.  

Other bodies such as the Council of Mortgage Lenders are strongly supportive of maintaining an non-advised route.

AMI says it could support this but only if customers are made aware of the protections they may be foregoing in following this route, such as their right to complain to the Financial Ombudsman Service.

Robert Sinclair, director of AMI, says there is a pressing need for further consultation on the combined elements of the MMR in a single paper, prior to implementation – because of the interconnection between the proposals.  

He says: “This is liable to be made more significant by initiatives in Europe, which will impact on some of the earlier proposals, will need amending, thereby causing a domino effect and make certain aspects of the proposals less practical.”

Sinclair says although the intent of the FSA is clear, it is unclear whether firms should be trying to adapt now or wait for the agreed appropriate outcomes.  

He adds: “We will welcome clarity on this and what constitutes the clients best interests and how we will maintain a level playing field between tied and intermediated sales and advice. In addition explanations of what constitutes a “quick quote” and how it would be used, together with how “reasonably foreseeable” will be measured would be helpful.”



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  • Luke Atkinson 25th February 2011 at 12:53 pm

    I agree with Neil Bellmamy, make it compulsory WOM advice.

    This would encourage good practice and help promote the professional advisers. It would also discourage bad practices from firms giving ”information only”. How many of these so called information only sales result in implied advice? How many of those clients feel they have been advised in some way?

    Information only = lack or fear of taking responsibility for the implied advice being given.

    What is the point of CeMAP otherwise?

  • Stuart Duncan 25th February 2011 at 12:09 pm

    the FOS is now bogged down with lump sum PPI claims.

    The AMI is championing the cause of consumer protection in what is supposed to be a regulated industry.

    The FSA have failed to impose even the scant protections offered in non-advised sales and allowed them to become execution-only no matter how vulnerable the potential borrower.

    There are fine lines between buyer beware, informed choice, execution-only and simply being duped by sales staff.

    A properly-regulated industry would protect all parties and the current non-advised chaos is against the interests of all except pile em high and sell em cheap brigade.

  • Neil Bellamy 25th February 2011 at 11:38 am

    Well why not make it independent whole of market advice as the compulsory requirement for all mortgage applicants – even seasoned home movers need advice, as they quite often only understand what they want to hear! This means obtaining best value mortgages with features that match the needs of the consumer, and will support smaller lenders, and new lenders alike creating a competitive dynamic market place.
    The big banks would like to be like the big supermarkets, with direct sales only with no advice, using their size to squeeze competition out = poor poor outcome for consumers.
    Why would even the most educated, and wise consumers not wish to take independent advice? Thank goodness the AMI is at last promoting what is good TCF for consumers – you may say they have a self interest which they obviously do. Who represents the CML – oh the big banks!

  • Maurice Edgington 25th February 2011 at 11:37 am

    I do not believe for one moment that mortgage customers understand what the FSA’s definition of advice is. Customers belive that advice is help not recomending a particulr mortgage. If advice, in the customers mind, is the best rate, best fees, best terms then 90% of all lenders shold not get any business. I would suggest that AMI funds a proper research directly to customers to see what they believe advice is. The normal qustion I hear from customers is ” can you advise if I will get a mortgage and what amount, how long will it take?” There must be some clearer thinking on this issue as there is definitely a need for people to be offered a suitable service on the basis of choice.

  • Michael White 25th February 2011 at 11:22 am

    Robert is quite correct, in terms of playing the FSA at its own game.

    Much of the impetus of intrusive regulation is due to the apparent belief that borrowers/consumers are not able to protect themselves (i.e. they need the protection of nanny rules…apparently) Moreover, there is the implication that the FSA can do a much better job then the lenders, which is why there is growing prescriptive rules on types of ‘acceptable’ mortgage products.

    The FSA surely can’t have it both ways? Robert recognises this. Therefore it is completely logical that any mortgage transaction for these poor unfortunates must require compulsory advice and guidance? Of course the FSA will ignore the suggestion, but 10/10 for effort on the part of the AMI for making a very valid point.

  • James Hall 25th February 2011 at 11:05 am

    The problem is that people continually prove themselves incapable of making sensible decisions.

    Like you, I am not a fan of the nanny state but until somebody sorts out our education system so that society is educated to a point where they can make decisions for themselves they need hand holding. A sad state of affairs but true.

    I suppose one plus point is that it might give another advantage to genuine quality advisers.

  • Wornout 25th February 2011 at 9:48 am

    More promoting of the “nanny” state. Whatever happend to “buyer beware”. If a client chooses to do it him/herself it should be their choice. They could sign a disclaimer acknowledging no come back.

    People are getting fed up of being treated like morons. Yes high risk groups need more care – but surely that is down to the credit scoring/underwriting systems to identify – coupled with proper income referencing.