Speaking at the Council of Mortgage Lenders annual conference in London today Sheila Nicoll, director of conduct policy at the FSA, said the regulator was hoping for changes in European draft regulation that would prevent lenders from giving advice on their own products only.
She said: “In the UK market about 50% of consumers who buy directly from a lender benefit from that lender providing advice on the best product within that lender’s particular range. There are also consumers who benefit from advice from intermediaries on a limited range of products.”
She said while consumers should be able to opt for whole of market advice it would damage the market to ban tied advice completely.
She added: “The advice provided by lenders and tied intermediaries still forms part of an important service, which the directive would prevent unless changed."
Nicoll also confirmed that the FSA wanted to retain supervision of the intermediary market rather than give up its authority to Europe.
“The proposals suggest the home regulator will supervise the activities of intermediaries,” she said. “We think it’s very important to ensure consumer protection and a level playing field by having regulation at a home level.”
She added that the European mortgage directive has shifted its focus away from the creation of a single market and more towards consumer protection.
“The discussions are reaching a crucial point at the moment,” she said, and encouraged the industry to stay engaged at a European level.
Nicoll added that international standardisation of financial regulation “is not the answer”.
She said imposing a one size fits all regulatory approach would likely result in significant cost and the possible exclusion of people from access to homeownership.
She said: “We think firms should be able to define their own risk appetite.”
