The Association has expressed strong opposition to any implementation of the FSA’s proposals, saying that they 'border on the irresponsible.'
It believes that the proposals for the investment market will also impact upon the mortgage market and thus introducing them without evaluation represents ‘market change by stealth.’
While it makes clear the RDR is about investment products, the FSA does note the potential for read across to the mortgage market, and indeed suggests the market may choose to apply the RDR proposals to other types of business - including mortgages.
IMLA says that the potential for regulatory creep is huge and creates an environment of uncertainty as to the future shape and structure of the mortgage market.
Peter Williams, executive director of IMLA, said: “With respect to the mortgage market, we totally disagree with the FSA’s assessment that commission-based sales lead to bias in the advice provided by intermediaries and lack credibility in the eyes of the consumer.
"On the contrary, this is a well established part of modern life, widely accepted and understood by consumers – a point demonstrated clearly in the international comparisons the FSA provides in its annex. It is not a matter of whether or not commission is paid, but whether there has been a whole of market search, there is transparency in terms of payments and the consumer gets the right product. MCOB requires this.
"Overall, we believe the current outcomes for consumers in the mortgage market are generally very favourable. In short there is no major problem to fix.
"The proposals of the RDR also raise the spectre that we could end up with different regulatory and disclosure regimes for investments and mortgages, even though in many cases the same IFA firms and the same providers conduct both categories of business. Whether wittingly or unwittingly, the FSA is setting out on a course of divide and rule within financial services.
"We call on the FSA to undertake an urgent short term review of mortgage market implications of the RDR, and to bring together mortgage trade bodies and industry experts to evaluate alternative ways forward.”
