The Financial Services Consumer Panel claims Mortgage Market Review proposals to scrap non-advised sales are over enthusiastic and unnecessary for many borrowers.
Adam Phillips, chairman of the FSCP, said: “You can see why that might happen in a market that has been mis-selling and mis-buying but it’s actually a pretty serious load if this is the second or third time you’ve taken out a mortgage or you’re trying to remortgage.”
He said because the industry was typically cautious there was a worry it would interpret the MMR proposals on advice to mean disclosing large amounts of information customers already knew about.
He said: “We think this has just gone a bit too far. The evidence is that this is a market where quite a lot of the people buying in it are able to understand what they’re doing.
“They need honest and straightforward disclosure, they need clarity and transparency. But if they have already bought a mortgage they should be able to do it again.”
Phillips said he believed the Financial Services Authority was “potentially confusing information with advice”.
And he added: “That’s the thing that makes the buying process and shopping around that much more difficult because you’re having to take advice.”
The FSCP is suggesting that mandatory advice be limited to the credit impaired, equity release, sale and rent back, right to buy and potentially first-time buyers.
Phillips said the MMR should also revert back to its original proposal that the definition of advice be aligned with terminology in the Retail Distribution Review to avoid customers thinking they have had advice when they haven’t.
This would see non-advised sales termed “restricted” and advised sales called “independent”.
