The Financial Services Authority (FSA) has come under fire from the mortgage industry about the use of filtering questions within the scope of regulation.
The regulator is hosting a series of roadshows across the UK in which it invites interested parties to meet and discuss any issues they might have with the CP146 consultation document.
So far, brokers and lenders have raised the issue of filtering questions which, as it stands, would fall into a non-advice situation. Brokers could go through a series of filtering questions with a client to help them make up their mind over which is the most suitable product, but it would not be recorded as advice.
Stephen Atkins, compliance services director at Mortgage Next, attended a seminar in Bristol and raised the issue at the time.
‘No-one believes if the client answers a number of questions asked by a broker which leads them to a range of suitable mortgages, that they will come away thinking that they have not received advice.’
‘This is a dynamite question. It could push up the cost of personal indemnity insurance immensely for those who choose to go down this route,’ said Atkins.
James Mayne, head of strategic development at Britannic Money, attended a similar seminar in central London. He agreed that the difference between filtering questions and advice is too close for most clients to understand.
Mayne said: ‘Most felt the more complex the situation, for example, the greater the loan or self-certification, the less confidence there was in filtering. The questions are not robust enough to always come up with a sensible answer.
‘The feeling was even if they use them the outcome could result in mis-selling.’