Pink advisers will now ask every applicant to bring in their work contract detailing their employer’s sickness and absence policy, or bring in details of any existing income protection policy.
According to the network mortgage stress tests should always incorporate whether people can afford to live in their home if they to lose their job or become ill.
Mark Graves, Pink director, said: “This isn’t about making more sales, this is about a moral obligation to make sure that every client can make an informed choice about taking on the largest financial commitment of their lives and understand the full implications of what will happen if they lose their job or are off sick from work for any length of time.
“We have presented this idea to brokers across the country over the past three weeks and asked our members what they thought.
“We could have made it a fundamental requirement of taking out a mortgage with Pink network, instead we explained the rationale and asked brokers if they would buy into the concept.
“We received a unanimous yes, so what we have now is a network of advisers who have made a commitment to do the right thing for their clients every time.”
When clients don’t want to take out income protection the adviser will document the conversation, with the customer signing an insurance declaration that they decided not to take any of the advice.
This is designed to protect the adviser should the worst happen.
Gary Little, head of operations & membership at the Society of Mortgage Professionals, said: “This move is long overdue and full credit goes to everyone at Pink for introducing what has long been the only right advice for the customer.
“This protection advice, arguably, should have been introduced by the FCA under the MMR as part of its stress testing proposals.
“We are supportive of Pink’s move to have this conversation with every customer which will help to make sure that significantly fewer people have to deal with the double whammy of losing their home as well as losing their house or their job.”
Statutory sick pay currently stands at just £87.55 per week if mortgage holders fall ill.
Graves added: “An adviser should, in every situation, be able to point out how long the client could maintain the mortgage and put food on the table if they suffered a long term illness or lost their job.
“Why it is left for a network and its members to make this stance, rather than it being articulated in the MMR is totally beyond me.
“My ideal would be for every network and every broker to follow in our footsteps and do the right thing.”
