The FCA published its Mortgage advice and selling standards policy statement and final rules late last week with the amendments going live immediately.
These included a package of measures to promote execution-only sales, supported by allowing the promotion of dual pricing strategies for execution-only sales.
Sinclair said: “Clearly we are very concerned regarding the potential for people to differentiate on price and using that as an incentive to move away from advice places a high risk for consumers,” he said.
“But lenders will have to think carefully about doing that.”
However, Sinclair said despite asking for feedback, the FCA implemented the rules as consulted.
The trade body also noted that the regulator’s “strong comments” in its policy statement were not necessarily reflected in the actual rules and regulation.
Rules don’t allow latitude
While the FCA statement was strongly worded in parts, Sinclair noted that the rules themselves were far more refined.
“The rhetoric of the policy statement reads as though there are significant changes that will open things up,” he continued.
“But when you get into the detail of the rules and the perimeter guidance, it makes it very clear that doing some of this stuff is very complicated, and you have to be very careful if you are a price comparison website that you don’t get dragged into the regulatory perimeter by overstepping the mark and not by keeping it very simple and factual.
“If you express any type of opinion or view or are steering a customer to a product, then you are in the world of advice.
“So while the upfront policy statement makes some fairly strong comments, I think the rules once you get right into the detail don’t allow as much latitude as perhaps is set out in the policy statement,” he added.
Principals-based approach
Sinclair highlighted that it was possible to issue an ESIS from execution-only contact without it being regulated, but any judgment calls would come down to an ombudsman.
“If there’s been any interaction that causes you to publish that ESIS then it is advice, and the nuance of that will be in the interpretation of an ombudsman,” he said.
“The other bit that’s interesting in the rules, is a statement that fundamentally firms should stand back and look at this in the whole, and not just look at a particular rule and find a way to use it to get around things.
“That’s an interesting statement to me as it seems to say apply the principals of this and not the details.”
Sinclair concluded: “It’s going to be interesting to see how people use it to develop what they are trying to do. It works far more easily in the product transfer space than the purchase and remortgage space.”
