David Copland: Blog

Tuesday 20th December 2011

I believe that the FSA’s recent Mortgage Market Review consultation paper will be warmly received by mortgage intermediaries as it focused on achieving the right consumer outcomes.

I think the FSA has got it spot-on regarding its proposals on distribution and disclosures. I absolutely agree with them on their stance regarding ‘advice and execution only’. There has been no doubt in my mind that if a conversation is had verbally or interactively with the consumer, that the recipient believes they have received advice.

I also agree with the proposal to offer execution only type sales for very specific customers and for when the consumer opts to choose the product themselves.

On the topic of initial disclosure, I think that whilst there is a proposal to remove the IDD, most intermediaries will choose to issue a similar document outlining their services.

Intermediaries will still be required to furnish the client with the scope of their services in a durable form, so I believe a form of the IDD will still be required.

However, intermediaries will not be able to hide behind the fact that they have issued this document, as they are required, at the outset, to verbally outline their remuneration and scope of service. This may lead to some intermediaries recording their initial conversation with a client in the event of a subsequent complaint in order that they can later prove it took place.

I amin agreement with the changes from the initial consultation. The initial paper suggested that intermediaries were required to assess affordability, whereas the new proposals lay this requirement firmly with the lenders.

However, intermediaries will still be required to ensure that consumers meet lenders’ known eligibility requirements, which is a reasonable thing to expect and do.

I feel that the FSA’s views on issuing KFIs, interest only mortgages and lending into retirement have been influenced by the feedback received.

I am encouraged by the FSA’s approach to the feedback from the previous three papers. The FSA has listened and acted upon the feedback: this paper is both succinct and the proposals far more practical.

I also agree with their timelines. This is all about making sure that when the market recovers we have rules in place that protect the consumer but also allow the market to expand again a controlled manner.

* David Copland is chief executive of Pink, an award-winning mortgage and insurance network providing products and services to the intermediary market