According to Home Buyer Systems, brokers who have issued Combined Initial Disclosure Documents (CIDDs) in the past to cover mortgage and insurance advice may be in breach of FSA requirements if they have never followed up on the insurance advice and recommendations.
However, in reviewing this part of their compliance records, brokers can create an excellent opportunity to bring in new business.
Richard Angliss, managing director of Home Buyer Systems, explained: “Back in the times of frenzied mortgage activity it was all too easy to give a CIDD but just not have time to get round to doing the insurance element.
“If, however, the CIDD had indicated in section 3 that the broker would advise and make a recommendation to the client after their needs had been assessed, the FSA would expect to find on the files that this was carried through for insurance as well as the mortgage. By “carried through” the regulator means that they expect to see that the broker has given advice and recommendations on all areas of Protection and GI that have been stated in section 2 of the CIDD.
“Even if the customer decided they did not want to accept the recommendations the regulator would expect to see documented evidence of this.
“Brokers need to be aware that remedial action to put right any CIDD failings can be turned to their advantage.
“They need to use the FSA’s requirement to review their customers’ insurance needs on a regular basis to re-contact their customers. In doing so, they will not only be putting things right from a compliance point of view, but will also be creating the opportunity to earn additional commission.”
