FSA considering mortgage adviser exams under MMR
The latest MMR consultation paper said the City watchdog would work to require all mortgage intermediaries, including those employed by lenders, hold a standardised mortgage qualification.
It said: “The mortgage exam syllabus has not been reviewed since 2004 and in CP10/28 we outlined our plans to do so. This is still our intention however, given that the MMR is such a wide ranging review of the mortgage market we feel that it is sensible to delay our review until we have a clear package of measures accompanied by an agreed implementation date implementation of a Code of Ethics for the mortgage market remains a condition of the extension of the Approved Persons Regime to mortgage intermediaries.”
However, the FSA said it would not require those who operate solely in the business market to obtain a relevant mortgage qualification, but they will need to show they are competent.
The MMR consultation also proposed a requirement for firms to offer consumers a choice of whether to roll-up their fees into the loan.
The City watchdog said it would limit the regulatory requirement imposed on intermediaries to determining whether the consumer meets the lender’s expected affordability criteria.
It said: “We propose to leave it up to an intermediary to decide how to deliver their advised sales process. The draft rules do not prevent intermediaries from using scripted questions, for example, in order to standardise the way they gather the necessary information from the consumer about their needs and circumstances.
“However, in order to ensure the consumer receives a suitable product, the intermediary will have to make a judgement about whether a product meets the consumer’s particular needs and circumstances, and so is appropriate for that consumer.”
The FSA proposed replacing the requirement to provide an initial disclosure document with a requirement for the firm to disclose the pieces of information that will help a consumer distinguish between one firm and other
It said firms would still be required to give consumers key facts illustrations when customers specifically ask for them, and must inform consumers of their right to do so.
The FSA also proposed that firms should give the consumer a “plain and simple” explanation of whether there are any limitations in the product range they provide.
The document also proposes that that certain vulnerable consumers, described as those in equity release, right-to-buy, sale and rent back and those consolidating debt must always receive advice. However, it said all but those in sale and rent back could opt out.
It said equity release products - comprising lifetime mortgages and home reversion plans - should come under a single ‘equity release’ market, It said: “This will mean that, under our disclosure proposals, intermediaries must explain to consumers that their service is restricted if they only offer one of these product types.”