Nigel Terrington said that rules requiring lenders to provide advice to mortgage applicants brought about by the Mortgage Market Review were causing nervousness among firms about the conduct risk associated.
Terrington’s comments emerged during a housing debate hosted by Instinctif, when the panel was asked if lenders should give up selling their mortgages directly to consumers.
He said: “I find it an odd concept that there is a level of encouragement to offer other lender’s products. Lenders are generally suffering from conduct risk paralysis in that they really don’t want to provide advice but they are bound to. I think one of the things they fear is that five years down the road the regulator will come back and accuse them of misselling to a customer and take retrospective action because the rules were not clear at the time.”
But Terrington praised the work of intermediaries adding that the industry’s share of the mortgage market was likely to get stronger.
“In general if people want advice on a wider range of products then that’s where they should go, but I don’t think we should just stop lenders providing advice if that’s what they want to do,” he added.
