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FSA releases MMR distribution paper

The Financial Services Authority has today released its Mortgage Market Review consultation paper on the role of intermediaries and improving disclosure of information for customers.

The consultation builds on the FSA’s Mortgage Market Review to date, and a key element is requiring that those selling mortgages ensure that each one sold is ‘appropriate’ for the customer’s needs and circumstances, therefore clarifying the role of the mortgage seller, both intermediary and branch based.

This follows earlier proposals by the FSA which looked at responsible lending and the role of the lender and the customer, and which set out that the responsibility to assess whether a customer can afford a mortgage ultimately lies with the lender.

In addition key proposals include:

  • Replacing the obligation to issue an Initial Disclosure Document to the customer with requirements to clearly and prominently disclose key information about how the intermediary will be paid and the service they offer;
  • Changing the trigger points for providing the Key Facts Illustration to minimise information overload on consumers and reduce burdens on firms;
  • A requirement for all individuals that sell mortgages to hold a relevant mortgage qualification ensuring appropriate professional standards across all sales;
  • Replacing the existing labels used to describe the firm’s service with the Retail Distribution Review’s ‘independent’ and ‘restricted’ labels; and
  • Requiring firms to disclose to customers whether they will consider deals that can only be obtained directly from a lender.

Sheila Nicoll, the FSA’s director of conduct policy, says: “This next step of the Mortgage Market Review recognises the importance of the intermediary and ensuring the quality of every mortgage sale. It also indicates how the intermediary and other sales staff fit into our vision of a sustainable mortgage market that works well for consumers.

“By clarifying the role and responsibility of mortgage sellers, we are removing the blurring that could take place between the role of seller and lender.”




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  • Bobby 18th November 2010 at 9:45 am

    Mr Client

    ” I have seen the HSBC 1.99% tracker. I think this is the best tracker rate “.


    ” yes , your right but it is a direct only deal “. That will be £ 400 please for my advice “.

    Yep I can see that working Melanie.

  • mark wilkins 17th November 2010 at 6:12 pm

    The whole industry is a sham!! The FSA should be ashamed of their performance and the sooner they are abolished the better. Write to your MP or the business secretary.

  • Melanie Samuels 17th November 2010 at 3:00 pm

    Dual pricing will not be an issue if you charge a fee for advice you can then pass on the client to the best deal for them, although having read the constant whinging for months and months I am not really surprised that you are all moaning instead of actually thinking of how to overcome the problems faced.

  • Bobby 17th November 2010 at 1:16 pm

    The FSA’s complete anhiliation of the whole of market mortgage broker is almost complete. 32000 down to 9000 and less than 5000 by the end of 2011 after their ” approved persons ” cull will let them wipe out more one man bands. Its very sad , especially if you have prided yourself on your occupation and the 1000’s of satisfied clients but this is what the FSA want and this is what the High Street Banks/ Dual pricers want. The FSA could not care less about a mortgage broker for reasons stated before. They want 5-6 High Street banks and thats it. Easier to regulate and lots of chummy business lunches with their mates in Canary Wharf. I detest and despise the FSA and what they are doing but, hey, who am I ?.

  • Luke Atkinson 17th November 2010 at 1:14 pm

    Grey Haired Underwriter – Unfortunately 99% of customers are driven by price and headline rate….

    Been a while since you advised?!

  • Grey Haired Underwriter 17th November 2010 at 12:22 pm

    Why this constant moaning about dual pricing? I don’t remember all of these comments when broker exclusives were the vogue and they offered a better rate than a direct product. Wasn’t that dual pricing?

    And I would absolutely refute the contention that all lenders dual price, especially not Building Societies, but perhaps some brokers use the cheapest price on a sourcing system as their sole justification for best advice rather than going deeper into the matter. I do know that the best brokers have personal relationships with various lenders and are still making an acceptable living

  • PC 17th November 2010 at 10:44 am

    If brokers may be required to disclose the clients whether or not they are including direct lender deals in their sourcing, will this mean that Direct Lenders will have to tell clients they could get a better deal via a broker or other lender?

    I must agree with other comments, there is an opportunity to create a level playing field in the market which will ultimately benefit consumers and this is the oft quoted main aim of the regulator.

  • Luke Atkinson 17th November 2010 at 10:11 am

    As much as it pains me to say it – the MAJORITY of consumers don’t need a mortgage broker.

    I completely understand the need for independent advice but unfortunately the MAJORITY of consumers don’t see the benefit of advice and believe they have the know how to sort their own mortgage out.

    With comparison sites pushing direct deals and encouraging consumers to cut out the ”middle man’ (whilst still selling the leads on to the brokers at the same time!?), unfortunately the consumer has more trust in these sites than they do in brokers.

    It really is a sad day. And lets face it, the MMR only protects the lenders as they pay the biggest fees to the regulator. If the FSA wanted complete transparency then they would ensure dual pricing was banned, they won’t and because of that they have applied the final nail in the coffin of the independent mortgage broker.

    Negative or realistic? An intelligent and forward thinking broker would say realistic.

  • Damien Brassneck 16th November 2010 at 2:43 pm

    Can anyone explain how it can take a 98 page document to say next to nothing!

    E.G. What’s the difference between giving key messages to consumers and what is currently given in the IDD?

    Absolute jokers! If it wasn’t so serious it would be hilarious.

  • GMS 16th November 2010 at 2:11 pm

    Requiring all sellers to hold a proper qualification seems like the most logical thing in the world. Makes you wonder why it was never needed in the first place.
    Pointing out fees and terms to clients is a joke. As has been mentioned previously it is very often clients claim to have been unaware of these despite IDD, KFI, Suitability Letter and Offer. Surely there needs to be some record of disclosure. Oh yes there is, the FSA have now decided we don’t need it!!
    Personally I get clients to sign a copy of the KFI. Although this does not prove beyond doubt that they understood it, it does at least show they have taken the time to read it. This together with all other documentation seems to provide a pretty compelling argument for having explained to clients the terms of business.
    Will lenders now be happy to train and pay for staff to be fully qualified? Personally I think there may be less appetite for lenders to rely on direct deals as a result and lead to broker channels increasing.
    Hopefully this will mean dual pricing will need to be removed, or at least have the gap between the two reduced. If the difference in rates were negligible there would be an informed choice for the client. Either pay the minimal difference to not deal with the lender and have the broker do the work, or take the cheap option of dealing with the application yourself to save a few quid per month.
    This paper could have been a disaster for intermediaries but as it is there are positives to be taken from it.

  • Neil Bellamy 16th November 2010 at 1:21 pm

    Whole of market, should mean precisely that! Direct deals should be avaiable via all distribution channels, thus creating a level playing for the consumer. Differing distribution channels only succeed in mystifying the market & is simply not treating consumers fairly. There may be no requirement to issue, an IDD however, I will continue to do so! Perhaps there is some European disclosure document due out soon, which supercedes the FSA’s powers? Maybe one that the consumer must sign to prove they have received, and more importantly understood it – the same with the mortgage offer too.
    When (eventually) the housing market recovers in so much to meet the needs of families, the direct channels would not be able to cope, and their mortgage desks would collapse under the weight of applications that they could not service fairly. Also surely the competition authorities should now look at the mortgage market with a view to making that level playing field happen.
    There seems to be lots of smoke, and mirrors from the MMR, at the end of which if nothing has really changed with regard to regulation, then perhaps the FSA can justify its cost please! One conclusion is that the FSA staff seemed not to have properly understood the industry, and so are not fit for purpose.

  • Jeremy Jackson 16th November 2010 at 1:18 pm

    Mr B Lund – with a negative attitude like yours you may as well leave the industry – I think things are picking up and the lenders do need us and yes Coventry don’t dual price in fact it is getting better all round and not all the best deals are direct don’t you know how to source mortgages?

  • Confused 16th November 2010 at 12:57 pm

    oral disclosure? how many people will “claim” never to have been told about a firm’s scope of service and fees/charges. They claim not to know now despite having received IDD, ToB, KFI, suitability letter and a mortgage offer etc all confirming the same facts

  • Kevin Grannersby 16th November 2010 at 12:33 pm

    @Mr B Lund – “brokers are not in lenders plans going forward – and beware the lenders that say they are – they ALL dual price.”

    Well, I know of at least one (Coventry) that has pledged NOT to dual price.

  • PSTONEY 16th November 2010 at 12:30 pm


  • Mr B Lund 16th November 2010 at 12:24 pm

    ..more brokers will exit the market next year – and you can add us to that list, brokers are not in lenders plans going forward – and beware the lenders that say they are – they ALL dual prie.

    Your better off going direct now – that’s where the best deals are for A1 borrowers.