Robert Sinclair, AMI director, said: “There’s always going to be a lot of debate about the detail of consultation papers, but it broadly seems to be levelling the playing field between banks and intermediaries.
“The introduction of qualifications for anyone who sells a mortgage, be they intermediary or based in a lender, and the proposed requirement to measure the appropriateness of a mortgage in all cases represents a significant levelling.”
The Financial Services Authority said today in its third MMR consultation paper, CP10/28, that around 30% of sales in the mortgage market are currently information-only and therefore require no assessment of appropriateness.
“We believe this is not delivering adequate consumer protection,” the paper said.
Sinclair added: “This will cause some lenders to look again at their options and perhaps consider doing more business through intermediaries.”
The consultation paper also requires brokers to tell their clients whether they will inform them about direct-only mortgages.
Sinclair said: “I think we’ve been in that space for some time. Most responsible firms are already doing this but the proposals to reduce the KFI triggers will make it easier. It means intermediaries will be able to advise on direct-only deals without incurring an increased cost, which may impact on lenders thinking about dual pricing in the future.”
All mortgage advisers will also have to be qualified up to level three, which Sinclair said was an “appropriate level”.
Other proposed changes will see advisers drop “whole of market” and “tied” and “limited panel” labels in favour of Retail Distribution Review labels “independent” and “restricted”.
Sinclair said he was “a bit worried about applying RDR terms to the mortgage market” though he added that “the independent test looks appropriately onerous”.
“We’ll be speaking further to the FSA on all of the proposals.”
The consultation for this paper ends on the 25th February 2011.
