The trade body submitted its mortgage distribution and disclosure paper (CP10/28) proposals to the FSA today and said the appropriateness and affordability proposals might make it difficult for consumers to understand whden they have received advice.
AMI said the proposed changes in the Mortgage Market Review are too complex to make sense in their current form and must be consulted on further.
Both the impact of Europe and the “interconnection” of the proposals mean without creating a single paper, the trade body continues to be “concerned” about the mortgage distribution and disclosure (CP10/28) paper.
A further consultation should also consider the significant impact of impending Europe initiatives on the current proposals.
It said the CML and other bodies are strongly supportive of maintaining a non-advised route. We can support this if customers are made aware of the protections they may be foregoing in following this route.
Sinclair said: “There are gaps between the proposed policy and the draft rules, making it very hard to respond positively on some aspects.”
He said problematic issues include the regulator making lenders responsible for the affordability assessment but simultaneously offering brokers rules, which risks blurring the responsibility.
“Greater clarity on affordability could be achieved by instead providing brokers with guidance to underpin the appropriateness test,” he said.
“Similarly the move to allow consolidation of fees would be better served by including this as part of the appropriateness test, rather than the use of multiple Key Facts Illustrations (KFI s) which all are agreed do not assist shopping around.
“Without a clear timetable or a view on which of the proposals will be implemented, we are concerned that firms are having difficulty planning.”
The trade body said the FSA’s intent is clear but it is not clear whether firms should be trying to adapt now or wait for the final outcomes.
We would welcome clarity on this as well as what constitutes the clients best interests and how we will maintain a level playing field between tied and intermediated sales and advice,” he said.
In addition, AMI called for explanations of what constitutes a ‘quick quote’ and how it would be used, together with how ‘reasonably foreseeable’ will be measured.
“AMI wishes to recognise the joint work undertaken with CML and IMLA in arriving at our own submission, with a broad degree of agreement on the core issues. We look forward to working with FSA to deliver practical, improved consumer outcomes,” said the trade body.
