Confusion has arisen after it materialised Abbey is not providing brokers with an option to simply refer or introduce clients to the lender if they are interested in taking its insurance products but must actually provide the advice themselves. Therefore, responsibility lies with the broker.
Stephen Atkins, group compliance director at Freedom Finance, explained how this was causing difficulties in the market. “Normally on the application form the broker ticks a box if the client is interested in the lender’s insurance deals,” he said.
“This has been widely treated as the broker introducing the customer to the lender. But with some lenders, they are saying ‘no, you didn’t introduce the client; you are giving them advice’.
“Thus the broker is responsible and may have been unaware they should have included this case on their RMAR report. Different lenders are taking different stances so brokers are being left in the dark about their insurance relationships with providers. We are currently confused about this whole issue.”
Joe Wiggins, spokes-person for Abbey, said: “We do not offer a referral process for brokers. The reason for this is we feel it’s important the client gets advice about the products. The broker has the opportunity to generate extra income which is becoming more crucial for mortgage intermediaries. Their client base is precious and they can make more out of it this way.”
Kevin Morgan, managing director of Consilium Financial Planning, commented: “I suspect this is more to do with compliance. If the case is simply introduced, it’s Abbey’s responsibility and maybe it’s not prepared to take this on. But brokers should be encouraged to advise the client on the whole process, including insurance.”
