The guide sets out largely established industry practice but aims to make the lender-broker sales responsibilities more transparent. It is also intended to be an important ‘marker’ ahead of the FSA’s proposals on distribution and advice out in November, said the trade bodies.
“The guide will be useful underpinning for market confidence, and should help consumers and policymakers, as well as the industry,” they said.
In the guide, for example, brokers are expected to highlight and feedback to lenders on unsuitable products and deliver effective training and clear information to all customer-facing staff.
The guide also suggests lenders should identify the types of customers for which a product might be suitable and those who should be excluded.
Providers also need to consider the distribution channel most suitable for each product, according to the guide.
The guide excludes commercial transactions, is not retrospective and is expected to be read in conjunction with the Treating Customers’ Fairly and MCOB rules, said AMI.
Key premises set out in the guide include:
–A shared commitment to work effectively together and in the best interests of the customer
–Responsibility for the quality of advice and the appropriateness of a recommendation in intermediary based sales lies with the intermediary
–Responsibility for ensuring the product performs as explained in its product and policy documentation lies with the lender.
–Ultimate accountability for the affordability of a mortgage lies with the lender, although the intermediary is responsible for establishing affordability to make sure that, when advice is given, a particular mortgage is appropriate and in accordance with the lender’s published criteria, or for non-advised cases that a mortgage is not unsuitable
–Lenders lend responsibly in line with their responsible lending policies
–Lenders and intermediaries can agree their own contractual relationships, payment mechanisms and service levels as long as these are in accordance with all legal and regulatory requirements, and align with the customers’ interests
Robert Sinclair from AMI said: “I would like to extend my gratitude to all the lender and broker representatives who have given time and effort to arrive at what is an extremely practical document. The work undertaken has done much to cement the value that all parties bring to ensuring a vibrant and competitive mortgage market that works well for consumers. AMI very much anticipates this is the start of a longer collaborative journey.”
Peter Williams from IMLA said the guide was put together over several months and thanked all the collaborators. He added: “The UK market remains challenging and good advice and support will be at a premium. We hope the guide will help make that a reality.”
And Jackie Bennett from the CML concluded: “This initiative demonstrates how, given the opportunity, lenders and intermediaries are able and willing to collaborative very effectively to drive good practice in the marketplace and create concrete mechanisms to achieve it, irrespective of regulatory intervention. The guide will also be a useful benchmark for analysing the FSA’s new proposals when they emerge.”
