which has been designed to help members handle retention issues and concerns surrounding regulated and unregulated contracts.
The factsheet covers compliance issues when reviewing existing mortgage arrangements and in cases where a client has an existing unregulated mortgage taken out before 31 October 2004.
The factsheet explores issues of Initial Disclosure Documents (IDDs), fact-finding, research, Key Facts Illustrations (KFIs) for retention products, using a sourcing system to obtain illustrations for an unregulated mortgage, and complaints and compensation.
Rob Griffiths, associate director of AMI, commented: “As a growing number of lenders offer increasingly competitive deals to existing customers, brokers may be recommending, or for non-advised sales, arranging, for their clients to stay with their existing lender more often. The factsheet is designed to help members and highlight the compliance issues that may be raised when dealing with retention business.”
AMI pointed out that if an intermediary was approached by a client (or approached a client) with a view to reviewing existing mortgage arrangements, such a review was likely to fall into the definition of advising, regardless of whether or not the outcome of the review is a recommendation to move either product or lender.
Griffiths added: “Brokers 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 products available within the firm’s scope of service.”
Simon Chalk, mortgage planner at Mortgage Portfolio Services, said: “There’s a grey area here. If you’re advising a client, it’s important to keep FSA rules at the front of your mind, regardless of whether the mortgage was regulated. AMI’s guidelines are timely and useful.”
