Holistic advice would entail looking at a client’s entire financial situation before advising them on the best products, but following the FSA’s advice, a number of commentators argued brokers would have to further diversify their knowledge to succeed in a holistic market.
Tony Jones, managing director of Pink Home Loans, said: “It presents a lot of challenges. The market is already incredibly complex, with brokers dealing across a range of products. It’s why packagers are so successful, because things like non-conforming are very complex. This would make the job of the adviser very difficult, though it depends on how onerous the requirements were. Ultimately, you could end up with having brokers who are jacks of all trades and masters of none, which is dangerous. Caution must be exercised. The market may lose good brokers as a result of this.”
However, Bill Warren, director of Complete Mortgage and Loans Services, argued holistic advice was destined to enter the mortgage market. “The European credit directive already basically says everything someone does has to be advised on, which is why I think this type of advising will creep into the mortgage market. We take
the view that brokers should at least be asking suitable questions anyway and ask the client whether they have a need for a financial adviser. In the extreme view, there will be no mortgage brokers or other variations and everyone will be a financial adviser.”
Robin Gordon-Walker, spokesman for the FSA, denied its stance had changed. “The suitability rules, as stated in MCOB, require brokers, when making recommendations, to have enough relevant information about their customers to make the most suitable recommendation. This is the position we have had since regulation.”
