The paper was published as the FSA’s attempt to outline the key respective responsibilities of providers (for example, mortgage lenders) and distributors (mortgage intermediaries) to ensure the fair treatment of customers. It was published as part of the FSA’s work on its ‘Treating Customers Fairly’ (TCF) initiative.
AMI’s response to the Discussion Paper stems from its belief that:
Only by addressing the information asymmetries that have grown in the industry between lenders and intermediaries can AMI members accurately advise their clients.
Lenders must take responsibility for any initial flaws in product design.
Lenders must not be able to ‘stand in splendid isolation’ apart from problems with product design that arise following the sale of a product.
Intermediaries do not shirk responsibility for the advice given, subject to the provision of clear information from lenders and insurers and a commitment to provide on-going information on the performance of a particular product type.
Rob Griffiths, associate director of AMI, commented: “AMI is pleased the FSA has given its views on these respective responsibilities and, in general, supports the division of responsibilities in the paper and agrees that the customer outcomes should be positive.
“There are however some areas where we need to ensure there is a clear line between the respective responsibilities. We would not wish to see the emergence of action by providers that intrudes into the client-adviser relationship, or behaviour where the selection process for distributors creates competitive distortion or jeopardises the independence of independent intermediaries.
“AMI intends to explore the specific responsibilities of mortgage lenders and intermediaries in the mortgage product life-cycle with the Intermediary Mortgage Lenders Association (IMLA). As part of this review we will consider the publication of a joint paper setting out our views at a more detailed level on the responsibilities of both a mortgage lender and intermediary. We believe this is the next natural step in the process.”
