In a principle based regulatory regime brokers could be forgiven for wanting some definitive guidance to help them know they are on the right track. Following the Mortgage Market Review the intermediary market knew it had to make changes but knowing exactly what to do presented more of a challenge. So when the Financial Conduct Authority published its report into mortgage market advice some may have been less surprised than others by its findings.
While no one particularly likes criticism this report offers two very large positives – firstly, it gives those brokers who have been getting it wrong a chance to make some necessary changes. And secondly, it allows the second charge market, which is new to the advised sales process, an insight into what the regulator wants and the chance to see if it’s on course, ahead of MCD regulation next year.
As a guiding theme brokers should adopt a sales process which better engages consumers, helps them understand the process and includes a more holistic fact find which results in well considered advice rather than the tick-box approach often used to justify a recommendation. Advice should be well evidenced as suitable and better record keeping and sales processes around affordability, debt consolidation and product differentiation will help.
If giving advice was previously considered a process or science, it seems the FCA view advice more as an art form which is full of subjectivity and assumptions. Like art, there is usually no single correct answer and the challenge will be to evidence how conclusions were reached and brokers’ personal biases were overcome.
Getting to the right outcome may need a process and mindset change for some. For others it may require better evidence of their current process. For second charge brokers the report couldn’t come at a better time.
