The FSA has published proposals with the aim the mortgage sales process, the role of intermediaries and improving disclosure of information for customers.
The consultation paper forms the third follow up to the Mortgage Market Review discussion paper published in October 2009. Consultation on these proposals will close on 25 February 2011.
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.
Key proposals also 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.
The FSA is also looking to change the trigger points for providing the Key Facts Illustration to minimise information overload on consumers and reduce burdens on firms as well as institute a requirement for all individuals that sell mortgages to hold a relevant mortgage qualification ensuring appropriate professional standards across all sales.
The regulator is also consulting over 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, said: “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.