Commenting on the content of the response deputy director general of AMI Fay Goddard said: “In principle, AMI supports the objectives of the Home Information Pack but as the consultation process has progressed, there is increased concern from our members of the unintended consequences that the introduction of HIPs may have on both consumers and the mortgage intermediary sector.
“The introduction of HIPs is designed to protect both buyers and sellers from financial loss and provide a more transparent and streamlined process for purchasing a property. The wider issues, including potential advantages, disadvantages and regulatory impact, have been subject to previous consultation and we acknowledge that this consultation seeks comments specifically on the draft regulations.
“We do, however feel it necessary to comment not just purely on the detail of the proposed rules but to highlight specific areas where we have concerns about the practical application of the regulations.”
AMI’s Key Concerns
1. The role of an independent MI is to source the market and obtain the most suitable and competitive mortgage and associated insurance products for their clients. This results in consumers receiving a good deal and helps maintain a strongly competitive market. Any obstacles or detractions that restrict or reduce consumer access to professional impartial advice would be detrimental to consumers and the reverse of stated Government policy on having wider access to better value financial products and access to advice.
We would therefore like to see safeguards within the rules that prevent HIPs being used in any anti-competitive way that would enable their production or distribution to be used as a means of restricting access to the full range of mortgage products available to the consumer.
2. A further concern relating to market practice is the potential for property companies, estate agents and lenders to use the HIP as a marketing tool for mortgages and/or associated insurance products targeted at the prospective house purchaser. The rule relating to prohibited documents disallows the inclusion within the pack, of any documents that are not required or authorised. But in practice, this will be difficult to police. Even if not part of the actual pack, an additional page or two highlighting special offers or deals, presented together with the HIP, is likely to attract attention.
We would look to the Financial Services Authority to confirm its stance that unregulated firms, such as estate agents which are not regulated for mortgage advice or arranging, must not breach the regulatory perimeter.
3. HIP providers will be keen to attract the future mortgage and insurance business of home sellers. Again, we have concerns that marketing of “free HIPs” could be used as a tool to restrict access to the range of mortgage products and insurance services available if the HIP provider does not offer a wide ranging service.
4. Mortgage intermediaries will be key players in raising awareness of HIPs. They may well be expected to explain their purpose and asked, for example, to advise clients on such subjects as the reliability of a home condition report. It is clear from the draft regulation that an accredited home inspector is responsible for the content of the home condition report, but AMI members are concerned over their liability for any HIP-related advice.
