That’s the conclusion of Sue Rossiter, principal of mortgage regulation at the trade body, who noted that the current regulatory guidance had become “difficult to work with” as lenders attempted to develop ways of working which “reflect how we conduct business today”.
Rossiter noted that many lenders had reacted to customer demand and opened up their activities nationwide, which meant they could not always speak with a customer face to face.
She added: “Some lenders have come to think that even answering technical questions on the phone is “interaction” and that therefore the customer would have to receive full advice, when they only want to know how to load up a payslip.”
Rossiter argued that the amount of interaction between the adviser and borrower, and how they interact, should not be relevant in determining whether the borrower has received regulated advice.
“Customers should be able to ask for factual information ‒ and firms should be able to supply it as many times as they like – without the interaction constituting regulated advice,” she continued.
Rossiter noted that some have warned that lenders being able to price differently for execution-only and advised deals will push people away from advice.
But she said that while there will be some borrowers who withdraw from an advised sale at the very end of the process, “maybe there is an opportunity for both lenders and advisers to reconsider their charging structures”.
Advice is a central part of the process for a reason
However, David Hollingworth, director at L&C, argued that if lenders are allowed to have a price differential “then you are leading people one way over another”.
Hollingworth added that advice had been made a central part of the mortgage process in the Mortgage Market Review because there was a danger that borrowers felt they had received advice when they hadn’t, and this needed to be a remembered in the conversation around what place execution-only has.
He continued: “Lenders say they are unclear around what they can and can’t say, and suggest it should be clear to the borrower when they are receiving a formal recommendation. But it works both ways ‒ it should also be made very clear to a borrower when they aren’t receiving advice.”