March said MCCB research had shown consumers were often confused over whether they had been given advice or simply provided with information when interviewed via scripted questions. He suggested that the FSA introduce a system whereby consumers are warned of the consequences of not obtaining proper advice and that only when actually providing advice should mortgage sales staff use the title of adviser.
On the issue of ‘reason why’ letters, which will no longer be compulsory under the new regime, March said they provided “an element of discipline in the sales process and help a firm meet its record keeping and reporting obligations”.
He also recommended the FSA introduce a system whereby customers are provided with a leaflet which lists for discussion all relevant general mortgage-related issues prior to the production of the KFI.
Bill Warren, director of the Complete Network and a former MCCB compliance officer, endorsed March’s views on ‘reason why’ letters. He said: “We will still be using them because they are an invaluable method of record keeping. One of the biggest problems in mortgage sales has always been the poor quality of product conformation letters.”
Tony Jones, managing director of Skipton-owned Pink Home Loans, commented: “I think the MCCB has done an excellent job in getting the industry in shape for regulation. My fear is that over-regulation could add significantly to the cost of mortgages for consumers.”
