Categories: Mortgages
Topics: FSA| mortgage arrears
Mortgage advisers have given their support to FSA proposals to introduce mortgage suitability letters.
The FSA is hopeful suitability letters will raise advised sales standards, and today's feedback statement on the Mortgage Market Review shows advisers support the proposals.
Suitability letters will provide better records of why specific advice is given, and bring mortgage advice into line with other areas, such as investments and pensions.
However, most respondents disagreed with implementing an adviser charging model, saying robust assessments of advice standards should be sufficient to prevent commission bias.
Respondents to the review also agreed lenders should take ultimate responsibility for ensure mortgages are affordable for their borrowers.
However, intermediaries and lenders disagreed on how best to assess affordability.
While brokers and consumer groups supported a proposal to measure affordability on disposable income, borrowing capacity, reliability of income information and capital repayment, lenders suggested these measures might not be an accurate indicator of a client's chance of default.
Lenders agreed a lengthened underwriting process will be necessary following the review, but warned it will result in increased costs for consumers.
Elsewhere in the feedback statement, the regulator said that firms must not add early repayment charges on arrears charges and interest levied on those charges.
It has clarified that firms must not apply a monthly arrears charge where the firm and the customer have agreed an arrangement to repay the arrears.
It will also oblige all firms to record all arrears handling telephone calls and to keep all records for three years.
Lesley Titcomb, FSA director responsible for the mortgage sector, said: "Today's proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly. Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits."
The document summarised the 178 responses received following the FSA's Mortgage Market Review discussion paper that was published on 19 October.
| Share | |
| Comment | Advisers back plans for FSA mortgage suitability letters |
More mortgages news
Email alerts
Recommended reading
Categories
Topics
Comments
Should already be doing this
Why wait? As a member of Sesame this is already compulsory anyway but as is the way of these things, it helps in a regulated environment to prevent any actions in the future. Comments, records and reasons why, if it is not written down, it didnt happen. Protect yourself and start doing this now!
Posted by: Patrick McCarry
KFI explanation
Far more appropriate than a suitability report would be a letter helping clients how to understand a KFI
Posted by: Ken
Mortgage Suitability letters
Sorry am I missing something? or have I been writing mortgage suitability letters and treating my customers fairly for nothing ??
Posted by: Jenny
Taking it all one step further
we have been recording the WHOLE client contact for nearly 3 years as MP3 and wav.docs so we know exactly what was said by whom and to whom. We started doing this , in part because we had some partically sighted clients for whom a typed report was useless and because having checked the FSA's rules for pension and investment business (not mortgages where it was not a requirement) until now, the rules require a REPORT in durable medium, not a letter and having a documented discussion with the FSA, they can see the logic in recordings, especially where sight or literacy are an issue.
Posted by: Phil Castle
Audit trail
Phil's right, far better to have a complete record of the advice from start to finish including customer questions and responses. Most of our customers have email and that's where all our conversations take place after the initial meeting.
Posted by: Ken Durkin
Suitable admin
All that is required is a fact find, sourcing list and a KFI with a text box at the end succintly explaining why it was recommended. We are overladen with unnecessary paperwork and some of you sound like turkeys begging for Xmas to be brought forward.
Posted by: Jules_london
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
What is absolute return investing?
Viewpoints
At the start of one of busiest times of year it is easy to think about all the obvious things...
sponsored by
EH?????
Been doing these for years........
Posted by: Greg