In the Mortgage Market Review rules published today HNW individuals and entrepreneurs can opt out of advice in favour of execution-only under new rules from the Financial Services Authority.
To qualify for this exemption both sets of customers must confirm in writing that they have been made aware of the consequences of losing the protection afforded by an advised sale and have chosen to proceed on an execution-only basis.
And for entrepreneurs, defined by the FSA as business people borrowing against their homes, lenders must see a credible business plan before providing a mortgage.
HNW customers will also be shown greater flexibility under the responsible lending policy and disclosure rules.
Although the lender must assess whether the customer will be able to meet repayments and demonstrate that the mortgage is affordable, it will not be required to “drill down” as deeply into the details as it would with a mainstream mortgage.
The assessment may be based on both the income and the assets of the borrower and while an expenditure assessment is required, the FSA has confirmed it is not going to specify how this should be done and it can be considered in a more general terms.
In terms of disclosure small adjustments to execution-only sales for HNW mortgage customers have been made.
These rules set out when a firm must provide a key facts illustration and when a customer has to be told they can request one.
