The three trade bodies have produced an updated guide for lenders and intermediaries which outlines the ways the industry must work together in the best interests of the customers.
This includes the responsibilities brokers have to deliver quality advice and appropriate recommendations.
The trade bodies say the document can be used by firms to decide if any action needs to be taken to bring them in line with the MMR rules.
The guide covers all pre-sale aspects including advertising and other literature, point of sale responsibilities including product recommendations and documentation and post-sale support.
Key points for brokers when recommending a product include:
– Are the customer’s requirements within the lender’s known eligibility criteria?
– Should the customer have an interest-only mortgage, a repayment mortgage or a combination of the two?
– Should the customer take out the mortgage for a particular term?
– Does the customer need stability in the monthly payments, bearing in mind the impact on the customer of significant interest rate changes in the future?
– Is it appropriate for the customer to have their payments minimised at the outset?
– Is it appropriate for the customer to make early repayments?
– Is it appropriate for the customer to have any other features of a mortgage?
– Is the mortgage appropriate based on the information provided by the customer on his credit history?
– Is it appropriate for the customer to pay any fees and charges up front, rather than adding them to the mortgage?
Paul Smee, director-general at the Council of Mortgage Lenders, said: “The new regulation of mortgages that takes place at the end of April will bring significant change to the industry and this updated guide will be a useful benchmark for implementing the new rules for both lenders and intermediaries.
“This collaborative approach in working jointly with the IMLA and AMI demonstrates the effectiveness of joint engagement in driving good practice within the industry to deliver good outcomes for customers.”
Peter Williams, executive director at IMLA, said: “The guide seeks to provide a simple way through what is an ever more complex system. The proof of its success will be in helping ensure this new more strongly advised and evidenced based system delivers the high quality customer outcomes we all desire.”
The full guide can be viewed on the CML website HERE.
