Under the proposals, when mortgages are sold by intermediaries rather than directly by lenders, intermediaries would no longer be responsible for assessing the affordability of a mortgage for a customer, yet would be required to consider the appropriateness of the mortgage (which seems difficult in the absence of a formal requirement for an affordability assessment).
And, because the FSA believes that few customers in practice shop around or use disclosure information to inform their mortgage choices, it is proposing an increased level of advice or quasi-advice in the form of an "appropriateness test" to be applied to all customers in all cases by the person selling the mortgage. In turn, this has led the FSA to conclude that all mortgage sellers should have the same level of qualification, whether or not they are making a product recommendation.
CML director general Michael Coogan said: "The big theme running through the mortgage market review, reflected again in this latest consultation paper, is a shift in the balance of responsibility away from the consumer. We will need to assess carefully whether there is a risk that, in following this path, the FSA embeds a culture of consumer apathy in the mortgage market, where someone else will always to be available to blame for the consumer's financial decision if it goes wrong.
"While we fully accept lenders' responsibilities to assess affordability in a realistic and practical way, we think there is a big question mark about whether this is the right route to take if we want to achieve financial capability and responsible borrowing by consumers."
