In its response to the regulator’s Mortgage Market Review (MMR) distribution and disclosure consultation paper, IMLA said far greater clarity was needed on several areas of the proposals to avoid confusion and make sure they were “fit for purpose”.
It highlighted the singles sales standard, rolling up fees, service disclosure and, particularly, affordability and appropriateness, as of most concern.
While IMLA maintained it was “broadly supportive” of many of the proposals in CP10/28, it warned a real danger existed that they would fail to meet the FSA’s objective by complicating rather than simplifying matters for the consumer.
IMLA said the FSA’s appropriateness test proposals were “confusing, overlapping, too detailed and too prescriptive” and needed to be completely redrafted, with a return to basics.
It said: “We would urge the FSA to thinking more clearly about the objectives of the test, the clarity of the distribution of responsibilities and the outcomes being sought.”
In addition, IMLA said that removing brokers from assessing affordability would mean they were not be able to do their jobs properly and advise suitable products.
It said that, while ultimate responsibility lay with the lender, limiting brokers’ role “understates the scale of the task”.
Meanwhile, IMLA said that creating a basic sales standard risked the danger of effectively banning non-advised sales, given that consumers find it difficult to distinguish between advice and non-advice.
Peter Williams, executive director of IMLA, said: “We need to see and discuss a fully integrated set of policy and rules drawn from across the different consultation papers before the MMR is fully finalised.”
He added: “Our biggest concerns are around affordability, appropriateness and best interests. These issues stand at the heart of the intermediary mortgage market and it is essential the FSA works with industry to secure effective outcomes. We need to ensure policy and rules are aligned and there is real clarity as to outcomes sought, roles taken and processes used.”
