View more on these topics

Lenders lobby FSA to get round MMR advice plan

Lenders are believed to be lobbying the Financial Services Authority to exempt hundreds of their call centre staff from having to be CeMAP qualified to offer advice.

The FSA’s final Mortgage Market Review consultation paper specifies that brokers and lenders will no longer be able to offer customers mortgage products on a non-advised basis.

Under the proposals mortgages must be offered on either an advised basis or execution-only.

Consumers can request an execution-only sale if they know precisely what they want to buy or if they are a mortgage professional or high net-worth client.

However, lenders are believed to be trying to introduce a new tier into the advice process known as transacting, which they argue is not offering advice.

Transacting occurs when a customer who has already taken out a mortgage wishes to make amendments to their deal, such as changing from interest-only to a repayment method, extending or shortening the term of their mortgage or remortgaging with the same lender.

Robert Sinclair, director of the Association of Mortgage Intermediaries, says it seems illogical that so-called transactors would not be classed as advice givers.

He says: “Such tasks are rarely execution-only as the customer arrives with a problem and the lender representative provides a solution usually through verbal interaction.

“That this verbal interaction must be advice is a logical conclusion based on the new rules.”

He says the issue needs to be debated before the cut-off point for submissions to the MMR on March 30.

Sinclair is concerned that a debate is happening behind closed doors but says the issue needs to be discussed openly.

The MMR states: “We believe that in all sales where there is spoken or other interactive dialogue between the consumer and firm, the firm should assess whether the mortgage is appropriate for the consumer ­ i.e. advise the consumer.

“This will cover all forms of interactive dialogue, whether face-to-face, over the telephone or social media, or online propositions with the facility for live chats.”

A spokesman for the Council of Mortgage Lenders says: “There is clearly a distinction between a customer who is changing an aspect of their mortgage and one who is applying for a new loan.

“There is a case to be made that the person would not need to go through the advice process and we will be exploring this in our response to the MMR.”

See today’s magazine for more details.


Johnson Fleming is a finalist at UK Pensions Awards 2016

The UK Pensions Awards shine the light on excellence and recognise the advisers, providers and investment managers that offer the highest level of innovation, performance and service to occupational pension schemes and their members. This year’s awards looked at advisers and providers across 31 different categories and were rigorously judged by a panel of senior […]


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Rob Lacey 13th March 2012 at 9:27 pm

    The FSA have displayed an incredible lack of understanding in the mortgage market generally over the last decade. Firstly, in being naive to the potential time bomb or irresponsible lending and then subsequently with their heavy handed approach to mortgage regulation, using a wide, one size fits all approach. But worse than this is the way that they have bowed to pressure from banks, allowing them to manipulate the system. When will they get a backbone and stand up to the banks ensuring that we are all on a level playing field, with the same responsibility to clients. Surely the main aim is that clients receive the best advice!!?? The banks should be made to work from the same rulebook as brokers and ensure that their staff are competent to give advice in the first place!

  • Steve Lupton 13th March 2012 at 9:55 am

    whenever a customer feels the need to change a product an assessment of their needs should be carried out therefore this constitutes advice. It will be interesting to see if the FSA once again fail in their duties and allow the banks to manipulate the system.

  • terry 12th March 2012 at 11:53 am

    The FSA cannot rock the boat with the banks as it will b…..r their chances of getting a well paid postion with them when the heat gets too hot in the kitchen

  • Bill Wells 12th March 2012 at 10:10 am

    Is it going to be one rule for brokers and a different rule for bank staff ? The FSA should be demanding the same minimum professional standards and qualifications of ALL those giving advice irrespective of whether they work for a bank or not.

  • Silver haired broker 12th March 2012 at 10:06 am

    Having just had a mortgage refused with no appeal for a client who breached their overdraft by £12 at Christmas. Go to offer with the same lender through the same Bank’s phone advisers at a higher rate than I advised the sooner these so called advisers are held to account the better. No problem with the clients getting the mortgage ( I asked them to try) but why recommend a higher rate product.

  • terry 12th March 2012 at 9:28 am

    Here we go again, the banks using their financial muscle and mates in the know to change the rules. After all the MMR is supposed to be the equal of RDR, so why shouldnt the banks follow the rules.

  • David Winder 12th March 2012 at 9:25 am

    If staff at lenders call centres speaking to customers dont know enough to pass the exams required to become a mortgage advisor then they shouldnt even be allowed to pick up the phone and speak to customers.

  • Jon T 12th March 2012 at 9:16 am

    Most if not all lenders already make a distinction between “product transfer” (non-advised) and the arrangement of an entirely new loan (advised), be it for a remortgage or new purchase.

    I’m with Robert Sinclair on this one. At which point do you cross over from product selling to instructing the applicant as to what is appropriate for them? What if the applicant has read about fixed and tracker, but doesn’t know which is better for them? Perhaps they want flexibility to overpay. What if they want a deal that ties them in for 5 years even though they may be planning to move home in 2? Do you simply pick a product off the shelf and go sell, or advise them appropriately?

    When a client speaks to a mortgage guy at a bank they are often unaware that he usually is unable to advise. Even when this is explained, the implications may not be immediately apparent, and I think it is here where an unhealthy level of ambiguity sets in (especially as the banks often call these people “advisors”).

    This lack of clarity should be dealt with, and this should be a step in the right direction.

  • Kevin Banting 12th March 2012 at 9:13 am

    There can be no short cut here for the lenders. Any dialogue regarding changing mortgage type/repayments/term represents advice therefore the person giving it should be qualified. If not I’ll go and play golf and I’ll get the wife to answer the phone to mortgage clients!