Each adviser belonging to the network will complete the assessment in the first appointment along with the current mortgage affordability assessment of income and outgoings.
Mortgage applicants will not be forced to take out protection if the stress test reveals they would not be able to maintain their mortgage payments but they will have to sign a declaration if they don’t take the advice. Pink’s advisers will document all protection conversations.
Mark Graves (pictured), head of Pink, said: “An adviser should, in every situation, be able to point out how long the client could maintain the mortgage and put food on the table if they suffered a long-term illness or lost their job. In my experience very few consumers will be familiar with just how little they are likely to receive from their employer in the event that they are no longer able to work.”
Graves said it wasn’t about making sales it was about having a ‘moral obligation’.
“Why it is left for a network and its members to make this stance rather than it being articulated in the MMR [Mortgage Market Review] is totally beyond me,” he added. “My ideal would be for every network and every broker to follow in our footsteps and do the right thing.”
Pink said there should be no issue with affordability if the amount for income protection, the life policy and the mortgage payment was under the customer’s stated monthly budget for the mortgage.
Head of operations and membership at the Society of Mortgage Professionals Gary Little said Pink’s decision was ‘long overdue’.
“This protection advice, arguably, should have been introduced by the FCA [Financial Conduct Authority] under the MMR as part of its stress testing proposals,” he said.
“We are supportive of Pink’s move to have this conversation with every customer which will help to make sure that significantly fewer people have to deal with the double whammy of losing their home as well as losing their house or their job.”
