One broker told Mortgage Introducer that networks were misunderstanding the Financial Services Authority’s (FSA) guidance by telling members the product to recommend was the one with the best rate.
The source said: “There seems to be a network view that the FSA wants brokers to always recommend the lowest monthly cost product and this opinion is being passed out to members. This is flawed and could be creating a problem in the future.
“The FSA actually expects the most appropriate product to be sold and as long as you record why the recommendation was made, you should be meeting the obligation.”
The concern stems from the fact that clients may have other options which rank higher for them than just having the cheapest rate, for example, if they need to complete the deal quickly.
Frank Thurlby, compliance director at GHL, said: “The understanding has been to source the cheapest product but what does this mean? It’s a bit confusing as the adviser is attempting to get the cheapest deal, but even the MCOB rules on what is best sometimes need to be overridden in the interests of the customer.”
Mike Fitzgerald, sales director at Brentchase Financial Services, admitted he could understand the confusion, but believed this practice was dying out.
“I can see where the concern is coming from but usually the big networks are fine with other factors being given higher priority as long as there is an audit trail. Some networks may be a bit unclear but this is dying out as they are investing in tighter compliance systems.”
However, Robin Gordon-Walker, spokesperson for the FSA, insisted:
“The requirement is for the most suitable mortgage product, so this may not be the lowest priced one but the one which is the most suitable to the client’s needs.”
