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Tougher penalties and broker databases key to raising advice standards – poll result

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  • 29/08/2018
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The majority of brokers suggest tougher penalties should be enforced against poor advice to guarantee mortgage advice standards remain high, whilst more than a third think a broker database listing individual brokers would also further professionalise the industry.

 

 

 

 

The poll was drawn from a blog by adviser Christopher Hall who wrote about how tired he was of sweeping up after other brokers who didn’t go the extra mile for clients in each and every case.

Last week Mortgage Solutions polled brokers on how to keep raising the bar on mortgage advice standards, with 37.7% voting for tougher penalties for poor advice and 34% saying that the proposed FCA database listing individual brokers would also help. Only 16% voted for tougher exams and 12.3% of brokers would go for ‘other options.’

Shaun Church, director of Private Finance, said better informed brokers give better advice, adding: “I would vote for other options, such as making sure brokers are undertaking professional development to be on top of market changes.

“I do not agree with tougher penalties because they cannot be tougher than they are.”

 

Education and business culture may help

Capricorn Financial Consultancy mortgage adviser Alex Smith said that tough penalties should exist but education and business culture are key to keeping high mortgage advice standards.

He added: “Poor advice comes from lack of experience, therefore being up to date on different products and changes in the market could definitely help.”

However, Dominik Lipnicki, director of Your Mortgage Decisions, said that the FCA database would be useful unless it causes delays in recruiting advisers.

He added: “In regards to tougher penalties, I think the regulator already uses its power. Lenders can remove individual advisers from panels very quickly and they do not have to give any explanation.

“Of course, poor advice needs to be blacklisted, but the decision needs to be taken carefully with an accountable process.”

Meanwhile, the Financial Conduct Authority (FCA) announced two proposals for individual broker databases in May and in July.

These proposals were aimed to consult with the intermediary market to develop a searchable tool to help consumers compare the quality and service of UK brokers as well as to help consumers and firms check individuals working in financial services.

Random spot checks to guarantee high standards

Lea Karasavvas, managing director at Prolific Mortgage Finance, agreed that random spot checks on brokers would be a great way of ensuring standards remain high.

He added: “By placing financial penalties on any ramifications of these, it would ensure brokers are ensuring every case is of the right standard through fear of being penalised. You would like to think that brokers have their own in- built levels of service as this is how they build up their referrals.

“Effectively, if every case is treated like your only case then this should build the level of quality, but where there is often the sales target to hit this can often have an impact on the quality of cases screened at the end of the month and it is this mentality that really needs addressing. Many companies now have in place compliance bonuses which I think is a great idea to incentivise great practice.”

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