The factsheet covers the following:
Firstly, the compliance issues when reviewing existing mortgage arrangements.
Secondly, the additional issues that will be raised where a client has an existing unregulated mortgage – taken out before 31st October 2004.
In covering these issues the factsheet explores the following areas:
-Initial enquiry: the issuing of Initial Disclosure Documents (IDDs).
-Factfinding.
-Research.
-KFIs for retention products.
-Pre-regulation mortgages – regulated mortgage contract or not?
-Using a sourcing system to obtain illustrations for an unregulated mortgage.
-Complaints and compensation.
Rob Griffiths, associate director of AMI, commented:
“As a growing number of lenders offer increasingly competitive deals to existing customers, mortgage intermediaries may be recommending (or for non-advised sales, arranging) for their clients to stay with their existing lender more frequently. The factsheet is designed to help members and highlight some of the compliance issues that may be raised while dealing with retention business.
“The key point to remember is that if an intermediary is approached by a client (or approaches a client) with a view to reviewing existing mortgage arrangements, such a review is likely to fall into the definition of advising. This is regardless of whether or not the outcome of the review is a recommendation to move either product or lender. Intermediaries must ensure they follow FSA rules for these activities including an assessment of the suitability of the retention product comparing it with the rest of the mortgage products available within the firm’s scope of service.”
