In its response to the Financial Services Authority’s consultation paper on mortgage distribution and disclosure (CP10/28) AMI director, Robert Sinclair, said: “AMI remains concerned about the fragmented approach to consulting on these major changes. Due to the interconnection of the proposals there is a pressing need for further consultation on the combined elements of the MMR in a single paper, prior to implementation.
“This further consultation should also consider the significant impact of impending Europe initiatives on the current proposals.”
Sinclair added that AMI believed there was a strong case for making advice compulsory for all if not some ‘at risk’ groups such as the credit impaired, those borrowing into retirement or first time buyers.
He said: “The new proposals on appropriateness and affordability might make it difficult for consumers to identify the difference between the advised and non-advised processes. Other bodies such as the Council of Mortgage Lenders are strongly supportive of maintaining a non-advised route. We can support this if customers are made aware of the protections they may be foregoing in following this route.”
In its response to the FSA, AMI identifies gaps between the proposed policy and the draft rules.
Sinclair said: “This makes it very hard to respond positively on some aspects. The FSA has made it clear that lenders will now be responsible for assessing affordability. However, the proposals also provide brokers with rules which risks blurring the responsibility.
“Greater clarity on affordability could be achieved by instead providing brokers with guidance to underpin the appropriateness test. Similarly the move to allow consolidation of fees would be better served by including this as part of the appropriateness test rather than the use of multiple Key Facts Illustrations which all are agreed do not assist shopping around.”
Sinclair also raised concerns about the lack of timetable for implementing MMR.
“Without a clear timetable or a view on which of the proposals will be implemented we are concerned that firms are having difficulty planning,” he said.
“The intent of FSA is clear but it is not clear whether firms should be trying to adapt now or wait for the final outcomes. We would welcome clarity on this as well as what constitutes the clients best interests and how we will maintain a level playing field between tied and intermediated sales and advice.”
Sinclair added that explanations of what constitutes a ‘quick quote’ and how it would be used, together with how ‘reasonably foreseeable’ will be measured would be helpful.
“AMI wishes to recognise the joint work undertaken with CML and the Intermediary Mortgage Lenders Association in arriving at our own submission, with a broad degree of agreement on the core issues. We look forward to working with FSA to deliver practical, improved consumer outcomes,” added Sinclair.
