CML director general Michael Coogan, said: “We will need to assess carefully whether there is a risk that, in following this path, the FSA embeds a culture of consumer apathy in the mortgage market, where someone else will always to be available to blame for the consumer’s financial decision if it goes wrong.”
Coogan said lenders fully accept their responsibility for the affordability assessment, but added: “We think there is a big question mark about whether this is the right route to take if we want to achieve financial capability and responsible borrowing by consumers.”
The CML said the latest distribution and disclosure (CP 10/28) paper appears to intend to push the market towards a greater proportion of advised sales, and to tip responsibility for product choice away from the borrower.
The FSA thinks few customers shop around, said the CML, so it is proposing an increased level of advice with this “appropriateness test” for all customers.
In turn, this has led the FSA to conclude that all mortgage sellers should have the same level of qualification, whether or not they are making a product recommendation, it said.
